REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7372 OF 2021

(ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 5051 OF 2020)

ARCE POLYMERS PRIVATE LIMITED .....APPELLANT(S)

VERSUS

M/S. ALPHINE PHARMACEUTICALS

PRIVATE LIMITED AND OTHERS .....RESPONDENT(S)

W I T H

CIVIL APPEAL NO. 7373 OF 2021

(ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 6178 OF 2020)

J U D G M E N T

SANJIV KHANNA, J.

Leave granted.

2.The impugned judgment dated 24

th

January 2020 passed by the

Division Bench of the High Court of Telangana at Hyderabad

allows Writ Petition No. 13936 of 2019 preferred by M/s. Alphine

Pharmaceuticals Private Limited and Bejjenki Bhaskara Chary

(collectively referred to as the ‘Borrower’) and thereby sets aside

and quashes the proceedings initiated by M/s. Andhra Bank (the

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 1 of 28

‘Bank’, for short) for sale of the mortgaged asset, namely, plot No.

66/B-1, Phase-I, IDA Jeedimetla, Quthbullapur Mandal, Medchal

Malkajgiri District, Hyderabad, Telangana (hereinafter referred to

as the ‘Subject Property’) as being in violation of the provisions of

the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 and the Security

Interest (Enforcement) Rules, 2002 (hereinafter referred to as the

‘SARFAESI Act’ and the ‘Rules’ respectively).

3.Aggrieved by the said judgment, the present appeals have been

preferred by M/s. Arce Polymers Private Limited, (for convenience,

we would refer M/s. Arce Polymers Private Limited as the ‘Second

Purchaser’) who had purchased the property from the original

auction purchaser, namely, Basa Chandramouli; and by the Bank.

4.The impugned judgment had formulated five points for

consideration, which read:

“(a) Whether the 1

st

respondent Bank had an obligation

to comply with Section 13(3A) of the Act and give a

response to the petitioners’ representation

dt.01.11.2016 and whether the Debts Recovery

Tribunal was correct in holding that there was no such

obligation on the part of the 1

st

respondent Bank?

(b) Whether any of the reliefs claimed in the O.A. by

the petitioners is barred by limitation?

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 2 of 28

(c) Whether it was proper for the 1

st

respondent Bank

not to separately value the machinery in the subject

property when it obtained the valuation before it sold

the property to the 2

nd

respondent?

(d) Whether it was incumbent on the part of the 1

st

respondent to obtain a fresh valuation certificate

dt.19.02.2018 in view of the long gap between the

valuation report and the e-auction sale held on

11.09.2018?

(e) Whether the petitioners are entitled to any relief?”

The impugned judgment decided the first four points in

favour of the Borrower and restored the physical possession of the

Subject Property to the Borrower inter alia recording that the

secured creditor, namely the Bank, was at liberty to act, in order to

recover its dues from the Borrower, strictly in accordance with the

SARFAESI Act and the Rules.

5.Before we delve into the legal aspects and issues with reference to

the above quoted five questions, we would like to refer to the facts

of the case as we believe that they portray a different story and this

factual background has not been duly reckoned and considered in

the impugned judgment. We, therefore, proceed to narrate the

facts in some detail:

(i)The Borrower was sanctioned working capital limit of

Rs.35,00,000/- (Rupees thirty five lakhs only) and granted

term loan of Rs.1,52,00,000/- (Rupees one crore fifty two

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 3 of 28

lakhs only) by the Bank in March 2015 with moratorium

period of six months to enable the Borrower to purchase M/s.

Alphine Pharmaceuticals Pvt. Ltd. from its erstwhile

promoters.

(ii)In accordance with the terms of the loan, the Subject

Property was mortgaged by the Borrower with the Bank.

(iii)The Borrower failed to repay the loan as per the payment

schedule as a result of which, on 31

st

July 2016, the loans

were declared as a Non-Performing Asset.

(iv)On 1

st

August 2016, the Bank issued notice to the Borrower

under Section 13(2) of the SARFAESI Act calling upon the

Borrower to discharge its liability within sixty days failing

which the Bank would be entitled to exercise all or any of its

rights under sub-section (4) to Section 13 of the SARFAESI

Act.

(v)The Borrower neither made any payment nor responded by

way of a reply within sixty days of the notice under Section

13(2) of the SARFAESI Act.

(vi)On 1

st

November 2016 and 6

th

November 2016 the Borrower

wrote letter(s) in which, while accepting defaults and non-

payment, it had enlisted reasons for not being able to adhere

to the payment schedule, namely, delay in commencement

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 4 of 28

of production of pharmaceuticals due to the requirement of

renewal of licenses from different statutory bodies, and policy

changes by M/s. Singareni Collieries Company Limited, their

prime customer, disqualifying them from participating in the

tenders. The bank was requested to grant further moratorium

of twelve months.

(vii)The letters dated 1

st

and 6

th

November 2016, do not profess

being a reply or objection to the notice dated 1

st

August 2016

issued by the Bank under Section 13(2) of the SARFAESI

Act.

(viii)On 7

th

November 2016, the Bank informed the Zonal

Manager of the Recovery Management Department, in re the

proposal submitted by the Borrower for restructuring the term

loan, extension of the moratorium period and induction of

fresh capital, with the following stipulations:

“Sub : NPA A/c M/s Alphine Pharmaceuticals Pvt Limited –

Request for restructuring of Term Loan and extension of

moratorium period.

Ref : Company Letter dated 06.11.2016.

With reference to the above, we inform you that the company

was sanctioned OCC limit of Rs. 35.00 lakhs and Term Loan

limit of Rs.152.00 lakhs vide SME.Sn.Lr.No.2265/52/SMECPC/

2236/S-197 dated 10.03.15 to acquire the unit. The unit was

acquired by the company on 19.06.2015 and due to change in

the constitution of the company from proprietary to Private

Limited company, the company had to get all the approvals /

licenses modified in the name of the company which had taken

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 5 of 28

time and production was started in the month of Sept. 2015.

The limits are fallen due for renewal on 09.03.16.

As per sanction gestation for the Term Loan was 6 months from

the date of disbursement and accordingly repayment was

started in the month of Dec 2015. Meanwhile M/s Singareni

Collieries Company Ltd which is to place orders to erst while

firm M/s Alphine Pharmaceuticals stopped placing orders to the

company stating that the entity should have Rs.10.00 crore

turnover as per the change in their procurement policy which

disqualified the company in participation of tenders. This

hampered the company orders and they had to look for other

clients for new business.

During the period the company had serviced the interest and

instalment payments by which they had liquidity problem in the

working capital and could not execute orders obtained from the

new clients.

The account was identified as NPA on 31.07.2016 and we have

issued Notice under SARFAESI Notice under Section 13(2)

was issued on 01.08.2016 and the acknowledgement of notice

from the borrower and guarantors has been received on

12.08.16.

The company earlier informed that they are entering MOU with

an investor group for infusion of Rs.1.00 crore and the liquidity

problem will be solved and they can revive the production

activity at higher level. It is informed that the investors have

invested only Rs.15.00 lakhs from which the company had

remitted Rs.10.00 lakhs into OCC account and utilized Rs.5.00

lakhs for payment of salary and other dues. The investors have

opted out without investing further amount.

The present position of limits and liabilities is as under:

14. BALANCE OUTSTANDING: (Liability with our bank) (Rs. in Crs)

FACILITY

LIMIT

SANCTIONED

OUTSTANDING BALANCE

RECOVERY

AFTER NPAREAL SHADOW PROVISION

Term Loan

021230100009479

1.52 1.39 1.50 Nil

OCC

021213100000502

0.35 0.40 0.41 0.10

Total 1.87 1.79 1.91 0.10

Company informed that though they are running the unit with

low capacity production i.e. Rs. 3 to 4 lakhs per month the fixed

expenses and interest charges are amounting to nearly Rs.5.00

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 6 of 28

lakhs per month by which they are incurring losses. Company

vide their letter dated 06.11.16 informed that they will to remit

Rs.6.00 lakhs by 15

th

of this month in the OCC account to bring

the liability in the OCC account within the limit and infuse

Rs.60.00 lakhs within three months by which the Working

capital liquidity problem will be solved and can execute the

orders on hand / to be procured. It is also informed that they

have approached M/s Singareni Collieries Company Ltd

authorities to reconsider the eligibility of the company in

participation of tenders as the erst while firm M/s Alphine

Pharmaceuticals was acquired by them and converted to

limited company. Now the company is requesting us to

restructure the Term Loan limit with further gestation of 12

months and is planning to remit Rs.6.00 lakhs by 15

th

of this

month in the OCC account to bring the liability in the OCC

account within the limit and permit them to operate the OCC

account.

We have vide our letter dated 06.11.16 advised the company to

submit Detailed Project Report / Techno Economic Viability

Report with regard to restructuring of the loan and extension of

moratorium period along with ABA as on 31.03.16 and

Provisional Balance Sheet as on a latest date at the earliest, to

assess the viability of the project and advise to remit Rs.6.00

lakhs into OCC account as promised.

On receipt of the Detailed Project Report / Techno Economic

Viability report, we shall take up the matter with our Zonal

office.

In view of the above and considering that the production of the

unit is continuing at a minimum level, which can be increased

to the full extent by infusing Rs.60.00 lakhs within three months

by the company as promised and payment of Rs.10.74 lakhs

into OCC account after NPA date, we recommend for deferring

action under SARFAESI till the TEV Report is appraised and

viability of the company is established by our approved agency

and allow operations in the OCC account after bringing the

liability to within the limit in OCC account.”

Thus, the action under the SARFAESI Act was

recommended to be deferred to enable the Borrower to

submit detailed project/viability report, bring OCC account

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 7 of 28

within limit and increase production to the fullest extent by

infusing Rs.60,00,000/- (Rupees sixty lakhs only) towards

the working capital. The Borrower was to be allowed

operations in their bank account after bringing the OCC

liability within the prescribed limit.

(ix)The third party investor brought in Rs.15,00,000/- (Rupees

fifteen lakhs only), out of which Rs.5,00,000/- (Rupees five

lakhs only) was utilised for payment of salary and

Rs.10,00,000/- (Rupees ten lakhs only) was remitted to the

OCC account. Thereafter, the third party investor opted out

and did not bring in the balance Rs. 45,00,000/- (Rupees

forty five lakhs only). Detailed project/viability report was not

submitted.

(x)On failure of the Borrower to translate its promise into action,

the Bank issued notice under Section 13(4) of the SARFAESI

Act read with Rule 8(1) of the Rules and took symbolic

possession of the Subject Property vide possession notice

dated 3

rd

March 2017.

(xi) Thenceforth, the Bank filed Crl.M.P.No.343/2017 under

Section 14 of the SARFAESI Act before the Chief

Metropolitan Magistrate, Cyberabad, Ranga Reddy District

and took physical possession of the secured asset on 3

rd

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 8 of 28

May 2017 through Advocate Commissioner appointed by the

court.

(xii)On 1

st

June 2017, the Bank issued notice under Rule 6(2)

read with Rule 8(6) of the Rules informing the Borrower that

the Subject Property was being put to auction with a reserve

price of Rs.2,78,10,000/- (Rupees two crores seventy eight

lakhs ten thousand only). The Borrower was given an option

to repay the amount due along with interest so that the

auction could be halted.

(xiii)The Borrower did not respond to this letter. It neither

protested nor made any payment.

(xiv)The auction held on 6

th

October 2017 did not fructify as no

bidder came forward to purchase the Subject Property.

(xv)On 20

th

October 2017, 8

th

November 2017 and 17

th

November 2017, the Borrower made representations for

regularisation of the account. The last letter dated 17

th

November 2017 refers to meetings with senior officers of the

Bank on 30

th

October 2017, 6

th

November 2017 and 8

th

November 2017 and that the Bank had agreed to restructure

the Borrower’s account upon furnishing of additional

collateral security of Rs.50,00,000/- (Rupees fifty lakhs only)

for which the Borrower had been advised to furnish

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 9 of 28

documentation. To establish bona fides, the Borrower had

furnished an undated cheque of Rs.25,00,000/- (Rupees

twenty five lakhs only) which could be presented upon

approval of the restructuring proposal. The Borrower would

furnish techno economic viability study-cum-restructuring

proposal. The Bank on consideration of the restructuring

proposal would allow the Borrower to reopen the factory. The

Bank was requested to handover keys to enable the

Borrower to assess the stock and build the unit for

commercial production.

(xvi)The Bank vide letter dated 30

th

November 2017, recapped

the Borrower the need to submit the restructuring proposal in

the prescribed format along with the details of additional

collateral security as well as legal opinion and valuation

report. The documentation, it was stated, was not received.

Also, visit of the Bank officers to the proposed collateral

security property had not been arranged. The Borrower was

informed that the Bank would take a call on Borrower’s

request for opening the factory, which was in the Bank’s

possession, after receipt of the aforementioned papers etc.

along with realisation of cheque presented by the Borrower.

The Borrower was advised to comply with the terms

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 10 of 28

immediately to enable the Bank to consider the proposal for

restructuring, with a warning that in case of delay, the Bank

would set into motion the proceedings under the SARFAESI

Act which had been temporarily halted.

(xvii)On 18

th

December 2017, the Borrower again wrote seeking

regularisation of the account and waiver of penal charges

levied in terms of the loan agreement. A restructuring

proposal was submitted as per the format with a request that

the same should be considered and the Borrower be

permitted to bring the unit to commercial operation as a one-

time opportunity.

(xviii)As per the Bank there was non-compliance and failure. No

payment was made. In these circumstances, the Bank made

second and third attempts to sell the Subject Property by

way of auctions held on 28

th

March 2018 and 14

th

June 2018.

Both the attempts failed as no bidder came forward to

participate in the auction.

(xix)Importantly, the attempts to sell the Subject Property

remained unchallenged by the Borrower.

(xx)On 20

th

August 2018, the Bank issued the fourth notice for

auction, regarding which the Borrower was duly informed.

Given the fact that in the earlier auctions no bidder had

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 11 of 28

participated, the Bank reduced the reserve price from

Rs.2,78,10,000/- (Rupees two crores seventy eight lakhs ten

thousand only) to Rs.2,60,00,000/- (Rupees two crores sixty

lakhs only). Yet again, the Borrower did not respond. It

neither questioned the sale notice, the reduction in reserve

price, nor made any payment.

(xxi)In the auction held on 11

th

September 2018, two bidders had

participated and the Subject Property was sold at a bid price

of Rs.2,91,20,000/- (Rupees two crores ninety one lakhs

twenty thousand only) to Basa Chandramouli. On 14

th

September 2018, sale confirmation letter was issued to Basa

Chandramouli. On 27

th

September 2018, after Basa

Chandramouli had made the total payment, the sale

certificate was issued.

6.In October 2018, the Borrower approached and filed a petition

before the Debts Recovery Tribunal challenging the enforcement

proceedings in respect of the Subject Property including all steps

taken right from issue of notice under Section 13(2) of the

SARFAESI Act.

7.The Debts Recovery Tribunal, Hyderabad by its judgment dated 1

st

July 2019 dismissed the Borrower’s application holding that the

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 12 of 28

Bank had followed the prescribed procedure under the SARFAESI

Act and the sale was valid.

8.Thereupon, the Borrower had preferred a writ petition before the

High Court of Telangana. The Borrower did not go in appeal to the

Debts Recovery Appellate Tribunal, Kolkata as it was not

functioning due to want of members. In the meanwhile, on 8

th

July

2019, the auction purchaser Basa Chandramouli sold the Subject

Property to the Second Purchaser, the appellant herein. Before

this sale, Basa Chandramouli had already sold machinery and

equipment. It is the case of the Second Purchaser that he had no

information or knowledge about the writ petition preferred by the

Borrower on 6

th

July 2019. The Second Purchaser had acquired

the plot with the bare structure, which the Second Purchaser

claims was in a dilapidated condition. The Second Purchaser had

an existing industrial establishment on a plot of land adjacent to

the Subject Property. After the purchase, the structure standing on

the Subject Property was demolished and the Second Purchaser

has constructed a new structure, as per the Second Purchaser at

the cost of over Rs.70,00,000 (Rupees seventy lakhs only).

9.After a detailed perusal of the facts in the present matter, we would

like to refer to the findings of the High Court and our findings on

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 13 of 28

the legal issues with reference to the points formulated by the High

Court, as set out in paragraph 4 above. For convenience, we

would like to simultaneously deal with points (a) and (b).

10.In brief, the impugned judgment upholds the contention on

violation of Section 13(3A) of the SARFAESI Act relying on the

judgment of this Court in ITC Limited v. Blue Coast Hotels

Limited and Others,

1

that compliance with Section 13(3A) being

mandatory, the Bank had failed to respond with reasons to the

representations made by the Borrower dated 1

st

/6

th

November

2016. The stance of the Bank that these representations were not

in response to the notice under Section 13(2) dated 1

st

August

2016 was rejected as the Borrower through representations had

pleaded difficulties being faced by it in repaying the loan

instalments and sought extension of moratorium/more time for

repayment. The High Court held that it was not necessary for the

Borrower to specifically mention that the representations were in

response to the notice under Section 13(2) of the SARFAESI Act.

Further, relying upon the decision of the Bombay High Court in

Blue Coast Hotels Limited v. IFCI Limited and Another,

2

which

decision on challenge became the subject matter of the appeal

1 (2018) 15 SCC 99

2 2016 SCC OnLine Bom 2663

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 14 of 28

and decision of this Court in ITC Ltd. (supra), the High Court held

that there is no specific provision or mandate under Section 13(3A)

of the SARFAESI Act that the representation of the Borrower to the

demand notice under Section 13(2) should be filed within a period

of sixty days from the date of notice. The impugned judgment also

refers to the letter dated 7

th

November 2016 to observe that the

Chief Manager of the Bank had recommended deferring of action

under the SARFAESI Act with the intent that the unit running in the

Subject Property should be granted benefit of deferment of action.

The Bank had proceeded to issue possession notice on 3

rd

March

2017 under Section 13(4) of the SARFAESI Act long after receipt

of the representations dated 1

st

/6

th

November 2016, but without

making any reference to the aforesaid representation. Accordingly,

on the first point, the High Court concluded that there had been a

violation by the Bank of its mandatory statutory duty under Section

13(3A) of the SARFAESI Act.

11.On the second question, reference was made to Section 17(1) of

the SARFAESI Act which deals with the right of appeal by a party

aggrieved by the measures referred to in sub-section (4) to Section

13. Relying on the decision of this Court in Authorised Officer,

Indian Overseas Bank and Another v. Ashok Saw Mill,

3

it was

3 (2009) 8 SCC 366

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 15 of 28

held that the series of steps from the date of action by the secured

creditor under Section 13(2) of the SARFAESI Act up to the date of

auction and sale confirmation can be challenged by the Borrower

when it challenges the measures referred to in the sub-section (4)

to Section 13 under Section 17 of the SARFAESI Act. In this view

of the matter, the High Court with respect to the second issue held

that though the O.A. was filed on 1

st

October 2018, the Borrower

can challenge the possession notice issued on 3

rd

March 2017,

taking of symbolic possession, taking of physical possession in

May 2017, the sale notice issued on 2

nd

July 2018, and the sale

certificate dated 27

th

September 2018 as they all form part of the

same cause of action. Consequently, it was observed that

challenge to the actions/measures prior to 2

nd

July 2018 would not

be barred by limitation.

12.In view of the factual matrix of the present case, which has been

set out in detail above and the aspect of waiver and estoppel

discussed subsequently, it is not necessary for us to examine the

question of violation of Section 13(3A) of the SARFAESI Act and

also whether the cause of action from the date of issue of notice

under Section 13(2) of the SARFAESI Act till the issuance of the

sale certificate is a continuing cause of action. Suffice it would be

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 16 of 28

to observe that in the case of ITC Ltd. (supra), this Court in spite

of holding that there was violation of Section 13(3A) of the

SARFAESI Act and consequently the notice of possession under

Section 13(4) was vitiated, had allowed the appeal in view of the

attendant circumstances set out in sub-paragraphs of paragraph

30 on the ground that the debtor, post the notice under Section

13(4) of the SARFAESI Act, had given proposals with assurances,

letter of undertaking for repayment of the mortgage debt, pursuant

to which time was granted and consequently the sale notice was

deferred. Only when payments were not made as promised that

the creditor had proceeded to recover the dues. Paragraph 31 and

32 of the decision in ITC Ltd. (supra) record as under:

“31. From the above, it is clear that the creditor was

induced by the debtor not to take action against them

through assurances and promises. The creditor

appeared to have entered into negotiations for the

settlement of the dues and even accepted cheques in

repayment much after the notice [Dated 26-3-2013]

under Section 13(2) and after the debtor's letter of

representation [Dated 27-5-2013] . Many opportunities

were granted by the creditor to the debtor to repay the

debt which were all met by proposals for extension of

time. Eventually, the debtor even executed “A Letter of

Undertaking [On 25-11-2013] ” acknowledging the right

of IFCI to sell the assets in the case of default.

32. In these circumstances, we have no doubt that the

failure to furnish a reply to the representation is not of

much significance since we are satisfied that the

creditor has undoubtedly considered the representation

and the proposal for repayment made therein and has

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 17 of 28

in fact granted sufficient opportunity and time to the

debtor to repay the debt without any avail. Therefore, in

the fact and circumstances of this case, we are of the

view that the debtor is not entitled to the discretionary

relief under Article 226 of the Constitution which is

indeed an equitable relief.”

13.We would like to elaborate on the aforesaid principle as the dictum,

as declared in ITC Ltd. (supra), will equally apply to proceedings

before the Debts Recovery Tribunal and the Appellate Tribunal

under the SARFAESI Act. The principle applied is that of waiver

and estoppel.

14.Waiver is an intentional relinquishment of a known right. Waiver

applies when a party knows the material facts and is cognizant of

the legal rights in that matter, and yet for some consideration

consciously abandons the existing legal right, advantage, benefit,

claim or privilege. Waiver can be contractual or by express conduct

in consideration of some compromise. However, a statutory right

may also be waived by implied conduct, like, by wanting to take a

chance of a favourable decision. The fact that the other side has

acted on it, is sufficient consideration. It is correct that waiver being

an intentional relinquishment is not to be inferred by mere failure to

take action, but the present case is of repeated positive acts post

the notices under Sections 13(2) and (4) of the SARFAESI Act. Not

only did the Borrower not question or object to the action of the

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 18 of 28

Bank, but it by express and deliberate conduct had asked the Bank

to compromise its position and alter the contractual terms. The

Borrower wrote repeated request letters for restructuring of loans,

which prayers were considered by the Bank by giving indulgence,

time and opportunities. The Borrower, aware and conscious of its

rights, chose to abandon the statutory claim and took its chance

and even procured favourable decisions. Even if we are to assume

that the Borrower did not waive the remedy, its conduct had put the

Bank in a position where they have lost time, and suffered on

account of delay and laches, which aspects are material. Action

on the Subject Property was delayed by more than a year as at the

behest of the Borrower, the Bank gave them a long rope to

regularise the account. To ignore the conduct of the Borrower

would not be reasonable to the Bank once third party rights have

been created. In this background, the principle of equitable

estoppel as a rule of evidence bars the Borrower from complaining

of violation.

15.The question of waiver of mandatory requirement of a statute was

considered by this Court in depth in Commissioner of Customs,

Mumbai v. Virgo Steels, Bombay and Another,

4

by referring to a

catena of judgments beginning from the judgment of the Privy

4 (2002) 4 SCC 316

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 19 of 28

Council in AL.AR. Vellayan Chettiar (Decd.) and Others v.

Government of the Province of Madras, Through the Collector

of Ramnad at Madura, and Another

5

wherein it was held that

though notice under Section 80 of the Code of Civil Procedure,

1908 is mandatory, the suit would not be bad if the non-issuance of

notice is waived by the party for whose benefit the provision has

been enacted. Similarly, in S. Raghbir Singh Gill v. S. Gurcharan

Singh Tohra and Others,

6

the argument that the requirement of

Section 94 of the Representation of Peoples Act, 1951 cannot be

waived was rejected observing that a privilege conferred or a right

created by a statute, if it is solely for the benefit of a party, the said

party can waive it. However, where a provision enacted is founded

on public policy, the courts would be slow to apply the doctrine of

waiver. The doctrine applies in the first situation as the right to

waive inheres in the concept of personal privilege and right.

Reference in this regard can be also made to the ratio in Krishan

Lal v. State of J&K

7

and Martin & Harris Ltd. v. VIth Additional

Distt. Judge and Others.

8

In Bank of India and Others v. O.P.

Swarnakar and Others,

9

and in Shri Lachoo Mal v. Shri Radhey

5 AIR 1947 PC 197

6 (1980) Supp SCC 53

7 (1994) 4 SCC 422

8 (1998) 1 SCC 732

9 (2003) 2 SCC 721

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 20 of 28

Shyam,

10

this Court elucidated the general principle that everyone

has a right to waive and to agree to renounce an advantage of law

or rule made solely for the benefit and protection of the person in

private capacity. If a party gives up the advantage that could be

taken of a particular position in law, it cannot later be permitted to

change and turn around so as to avail of that advantage. However,

this rule will not apply when there is a prohibition against

contracting out of the statute, which prohibition would have its

consequences or in case the waiver would be contrary to public

policy. Further, a person cannot waive a right of a third person.

16.This principle has been subsequently followed in Pravesh Kumar

Sachdeva v. State of Uttar Pradesh and Others,

11

to hold that

waiver is abandonment of a right which normally everybody is at

liberty to waive. Waiver is nothing unless it amounts to release,

albeit it can be adduced from acquiescence or may be implied. The

essence of waiver is an estoppel and they are questions of

conduct and, therefore, necessarily determined on the facts of

each case. As a rule and judicial policy, the courts of law do not

allow a litigant to take inconsistent position to gain advantage

through the aid of judicial proceedings.

10 (1971) 1 SCC 619

11 (2018) 10 SCC 628

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 21 of 28

17.In consideration of the facts of the present case, another important

aspect to be duly noted is the power of the courts/judicial

authorities to mould relief. While holding that the general approach

is that the claimant who succeeds in establishing the unlawfulness

of administrative action is entitled to grant of remedial order, the

general proposition does not undermine the discretion which the

courts or judicial authorities have in assessing “what is fair and just

to do in the particular case – to withhold the remedy altogether or

to mould the remedy by grant of a declaration rather than a more

coercive quashing, prohibiting or mandatory order or injunction

which may have been sought.”

12

Relief may be granted in respect

of one aspect and not others. The general approach, therefore, is

that a complainant who succeeds in establishing unlawfulness of

an action is entitled to a remedial order, but the court has

discretion in the sense of determining what is fair and just to do in

a particular case. This discretionary aspect of grant of relief even

with reference to post litigation events has been highlighted in Beg

Raj Singh v. State of U.P. and Others,

13

wherein it was held as

under:

“ 7. Having heard the learned counsel for the petitioner,

as also the learned counsel for the State and the private

12 De Smith’s Judicial Review, Eigth Edition (2018), at page 1006

13 (2003) 1 SCC 726

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 22 of 28

respondent, we are satisfied that the petition deserves to

be allowed. The ordinary rule of litigation is that the

rights of the parties stand crystallized on the date of

commencement of litigation and the right to relief should

be decided by reference to the date on which the

petitioner entered the portals of the court. A petitioner,

though entitled to relief in law, may yet be denied relief

in equity because of subsequent or intervening events

i.e. the events between the commencement of litigation

and the date of decision. The relief to which the

petitioner is held entitled may have been rendered

redundant by lapse of time or may have been rendered

incapable of being granted by change in law. There may

be other circumstances which render it inequitable to

grant the petitioner any relief over the respondents

because of the balance tilting against the petitioner on

weighing inequities pitted against equities on the date of

judgment. Third-party interests may have been created

or allowing relief to the claimant may result in unjust

enrichment on account of events happening in-between.

Else the relief may not be denied solely on account of

time lost in prosecuting proceedings in judicial or quasi-

judicial forum and for no fault of the petitioner. A plaintiff

or petitioner having been found entitled to a right to

relief, the court would as an ordinary rule try to place the

successful party in the same position in which he would

have been if the wrong complained against would not

have been done to him...”

Reference in this regard can be also made to an earlier

decision of this Court in Rameshwar and Others v. Jot Ram and

Another.

14

18.In the present case, it is clear from a bare perusal of the letter

dated 7

th

November 2016 sent by the Bank to its Zonal Manager

that the Bank actively considered the Borrower’s request for

extension of the moratorium period. The Borrower did not submit

14 (1976) 1 SCC 194

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 23 of 28

the viability report and failed to bring in Rs. 45,00,000/- (Rupees

forty five lakhs only). Post this default also there were negotiations

with assurances and promises by the Borrower. Displaying

forbearance, the Bank granted indulgence as action under the

SARFAESI Act was deferred for nearly one year from 7

th

November 2016 till 6

th

October 2017. Thereafter, negotiations were

held on 30

th

October 2017, 6

th

November 2017 and 8

th

November

2017. The email dated 30

th

November 2017 addressed by the

Bank to the Borrower highlights the dilatory and tricky approach of

the Borrower as it had failed to submit details of the additional

collateral security offered along with the legal opinion and the

engineer’s valuation report. Even visit to the proposed collateral

security property was not arranged. The Borrower again tried its

luck and submitted a restructuring proposal vide communication

dated 18

th

December 2017, but this did not fructify into an

acceptable settlement. The Bank having lost faith could not rely on

the Borrower. Only thereafter, the Bank proceeded with the

auctions under the SARFAESI Act on 28

th

March 2018 and 14

th

June 2018. The Borrower then kept silent. As the earlier auctions

failed, the Bank issued notice dated 20

th

August 2018 informing the

Borrower about the fourth auction to be held on 11

th

September

2018 at a reduced reserve price. The Borrower challenged the

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 24 of 28

actions taken by the Bank after the Subject Property had changed

hands and third party interests had been created. Taking into

consideration the entire facts of the case, which perspicuously

reflect disingenuous conduct on part of the Borrower to gain

indulgence, unfulfilled assurances and promises, their

unwillingness to pay, and in light of the law laid down by this Court,

we are of the view that the Borrower has waived and is estopped

from challenging violation of Section 13(3A) of the SARFAESI Act

and hence, the first issue is decided in favour of the Bank. Given

the aforesaid position, we do not think we are required to examine

the second point, i.e. whether in an application under Section 17 of

the SARFAESI Act, which can be filed when a Borrower is

aggrieved by any of the measures referred to in sub-section (4) to

Section 13 within forty five days from the date such measures are

taken, the Borrower can challenge other measures, steps and

procedures which preceded the ultimate sale even if barred by the

limitation period of forty five days.

19.With regard to the third issue of the valuation of the machinery and

the adverse finding of the High Court on the question of valuation

before the machinery was sold in auction, it is to be noticed that

the valuation report which has been placed on record is dated 19

th

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 25 of 28

February 2018, values the land, the building and the machinery

separately. The machinery has been valued with specific reference

to as many as 55 separate items under the Heading ‘Description of

Machinery’. The valuation report itself has not been disputed or

challenged. We do not agree with the High Court that the

machinery should have been separately auctioned or sold. This

would be putting fetters and restrictions on the Bank by baring the

Bank from selling the machinery along with the building and the

land. Prejudice and loss caused to the Borrower is not shown and

established. Auction sale as confirmed was at a price higher than

the fair market valuation of the land, the building and the

machinery. Whether or not the price of the machinery should be

accounted for the purpose of payment of stamp duty on a

composite sale wherein the land, the building and the machinery

located in the building are sold, would not be of any relevance and

importance as the issue in question does not concern payment of

stamp duty and the principles applicable. On the other hand, the

law recognises that the lender knows its interests and how to

secure best value of the property given the fact that the mortgaged

property had to be sold for recovery of the debts due and payable

to the Bank.

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 26 of 28

20.The fourth issue relating to the date of the valuation report also

does not help the Borrower. The valuation certificate or report is

dated 19

th

February 2018. As held above, attempts to sell the

property were made thereafter on 28

th

March 2018 and 14

th

June

2018 but without success as there were no bidders. Accordingly, it

was decided to reduce the reserve price from Rs.2,78,10,000/-

(Rupees two crores seventy eight lakhs ten thousand only) to

Rs.2,60,00,000/- (Rupees two crores sixty lakhs only). However, in

the fourth auction the successful bid given by Basa Chandramouli

was for Rs.2,91,20,000/- (Rupees two crores ninety one lakhs

twenty thousand only), which is much higher than the reserve price

of Rs.2,60,00,000/- (Rupees two crores sixty lakhs only) or the fair

market value of Rs.2,73,80,000/- (Rupees two crores seventy

three lakhs eighty thousand only) in terms of the valuation report.

21.Resultantly, we allow the present appeals and set aside the

impugned order dated 24

th

January 2020 passed in Writ Petition

No. 13936 of 2019. The writ petition would be treated as

dismissed. The order passed by the Debts Recovery Tribunal

dated 1

st

July 2019 upholding the procedure and sale of the

Subject Property under the SARFAESI Act is upheld.

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 27 of 28

However, in the facts of the present case, there would be no

order as to costs.

......................................J.

(L. NAGESWARA RAO)

......................................J.

(SANJIV KHANNA)

......................................J.

(B.R. GAVAI)

NEW DELHI;

DECEMBER 03, 2021.

Civil Appeal a/o. of SLP (C) No. 5051 of 2020 & Anr. Page 28 of 28