SALE NOTICE TO BORROWER AND PUBLICATION OF SALE NOTICE UNDER SARFAESI CAN BE DONE SIMULTANEOUSLY - SUPREME COURT

 A few months back, Rule 8 (6) of the Security Interest (Enforcement) Rules 2002 was given an entirely new interpretation by the Hon’ble High Court of Hyderabad. The High Court had held that Rule 8 (6) read with Rule 9 of the Security Interest (Enforcement) Rules, 2002 (for short ‘the said Rules’) mandates the secured creditor to put the borrower on a separate individual notice prior to deciding on the mode of sale of the secured asset before the public notice fixing the date of auction/sale was issued. It was observed by the Hon’ble Court that such notice should be in addition to the notice of 30 days duration to be given by the secured creditor conveying its intention to put the secured asset on sale, which is mandatory under the Sub Rule 6 of Rule 8. It thus mandated that the Authorised Officer has to first issue a 30 days Notice to the Borrower notifying him the intention of the secured creditor to liquidate his mortgaged assets. If the Borrower fails to repay the liability within this period, then only the Authorised Officer is permitted to issue the public notice regarding the intention to sell the secured asset under the Sub Rule 6 of Rule 8.
Justifying its stance the High Court had observed that putting the Borrower on notice, threatening him with the prospects of liquidation of assets, shall enhance the efficacy of realizing/securitizing the secured assets and that abstaining from issuing such notice shall sub-serve the object behind Section 13 (8) of the SARFAESI Act.
This Ruling was heavily blow to the Banks who were already ailing from their huge NPA burden as the view held by the High Court required them to give an additional 30 days notice period to the Borrower apart from the Statutory notice period of 30 days for the Sale of the property stipulated by Rule 8 (6). Canara Bank who was on the receiving end of the Judgement had preferred an appeal before the Supreme Court against this view held by the High Court.
While deciding the matter in Canara Bank v M Amarender Reddy (AIR 2017 SC 1441; MANU/SC/0271/2017) the Hon’ble Apex Court made a detailed analysis of the process of issuing the Sale Notice stipulated under the Security Interest (Enforcement) Rules, 2002. The Court held that the stipulation of the notice of intention of sale required to be given to the borrower in terms of Rule 9(1) read with Rule 8(6) of the said Rules, is to give intimation to the borrower about the proposed date of sale to be held after the statutory period of thirty days. However, there is nothing in the Rules, either express or implied, to take the view that a public notice under sub-rule 6 of Rule 8 must be issued only after the expiry of 30 days from issuance of individual notice by the authorized officer to the borrower about the intention to sell the immovable secured asset.
The Court pointed out that the High Court has committed a manifest error in assuming that the notice of intention of sale to be given to the borrower and a public notice for sale cannot be simultaneously issued. The Apex Court expressly held that there is no need to wait for the expiry of 30 days from issuance of notice of intention to sell the secured asset given to the borrower, for publication of a public notice for sale of such asset and that it is permissible to simultaneously issue notice to the borrower about the intention to sell the secured assets and also to issue a public notice for sale of such secured asset by inviting tenders from the public or by holding public auction.