A.M.KHANWILKAR,J. - (1.) This appeal by the appellant bank questions the view expressed by the Division Bench of the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh in Writ Petition No.39735 of 2015 dated 11.04.2016 to the extent it has held that Rule 8 (6) read with Rule 9 of the Security Interest (Enforcement) Rules, 2002 (for short 'the said Rules') mandates that the secured creditor must put the borrower on a separate individual notice prior to deciding on the mode of sale of the secured asset. Further, 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. The relevant portion of the High Court decision, which is impugned in this appeal reads thus: ".. . . . . . . . . . The Supreme Court has clearly enunciated that a reading of sub-rule (6) of Rule 8 and sub-rule (1) of Rule 9 of the Rules together, the service of individual notice to the borrower specifying a clear 30 days time gap for effecting sale of immovable secured asset is a Statutory mandate. Hence, use of the expression 'or' found in Rule 9(1) of the Rules is only appropriate to be read as 'and', as that alone would be in consonance with sub-section (8) of Section 13 of the Act. We may also add that a notice of intended sale by providing a clear 30 days time to the borrower preceding any decision to sell away the secured asset would, in fact, be in consonance with the mandate of the provision contained in sub-section (8) of Section 13 of the Act, as it is too well known that the Rules made under a Statute are only essentially intended to secure effective implementation of the provisions contained in the Statute. In our opinion, therefore, putting the borrower on notice of 30 days duration by the secured creditor conveying the intention to put the secured asset to sale is mandatory. Such notice would be applicable even if the secured creditor later on decides to adopt any one of those four methods provided in clauses (a) to (d) of sub-rule (5) of Rule 8 of the Rules. As was already noticed supra, in cases of obtaining quotations from persons dealing with similar secured assets and also by entering into a private treaty, may not require publication of the intended sale in newspapers. Hence, without, first of all, putting the borrower on notice, threatening that the prospects of liquidation of the secured asset by any of the methods specified under sub-rule (5) of rule 8 of the Rules would not only sub-serve the object behind sub-section (8) of Section 13 of the Act, but would, in fact, enhance the efficacy of realizing/securitizing the secured asset. As was already held by us, the secured asset is liable to be sold only in the event of default persisting in liquidating the liability. In other words, only when the borrower commits a default in payment of the outstanding liability, in spite of the notice threatening with intended sale of the secured asset, the actual sale notification can follow, but not otherwise. In the instant case, the secured creditor has put the borrower on one single notice of sale, which was also published in two newspapers, but, he has not put the borrower on a separate individual notice prior to deciding on the mode of sale of the secured asset. For this reason, we are of the opinion that the sale undertaken pursuant to the sale notification is vitiated for want of not providing the opportunity of 30 days clear time before undertaking the actual sale". (emphasis supplied)
(2.) On that reasoning, the High Court concluded that the subject sale notification issued by the appellant did not conform to the stated mandatory requirement and was thus vitiated on that count. The High Court, however, preserved the remedy of the appellant bank to proceed further, including to resort to sale of the secured asset, if the borrower has failed to clear the outstanding liability, by publishing a fresh sale notification in accordance with sub-rule 6 of Rule 8 read with Rule 9 of the Rules.
(3.) Briefly stated, the appellant had provided financial assistance of Rs. one crore to M/s Eversure Aqua Solutions Pvt. Ltd. The respondent no.1 was one of the two guarantors for the said loan transaction. The respondent no.1 had offered his immovable property as security, bearing Plot No. 70, admeasuring 278 square yards situated in Survey No.66/6, Ward No. 3, Block No.7 in Mansoorabad village, Saroornagar Mandal, L.B. Nagar Municipality, which has now become part of Greater Hyderabad Municipal Corporation.;