(Prayer: Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction more particularly one in the nature of Writ of Certiorari to. (I) Call for the case records relating to Appeal No. 15 of 2019 on the file of Hon’ble Debts Recovery Appellate Tribunal, Kolkata and (II) To set aside the Final Order/judgment dated 18.07.2023 passed by Hon’ble Debts Recovery Appellate Tribunal, Kolkata in Appeal No. 15 of 2019, and consequently to set aside order dated 29.01.2019 passed by the Hon’ble Debts Recovery Tribunal-2 at Hyderabad in SA No.l26 of 2012 (old SA No. 255 of 2012 on the file of DRT-1 at Hyderabad) and (III) To pass

IA NO: 1 OF 2024

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to suspend the operation of the Final Order/ judgment dated 18.07.2023 passed by Hon’ble Debts Recovery Appellate Tribunal, Kolkata in Appeal No. 15 of 2019 pending the disposal of the above writ petition and to pass)

Cheekati Manavendranath Roy, J.

1. This writ petition is filed assailing the judgment dated 18.07.2023 of the Debt Recovery Appellate Tribunal, Kolkata, passed in appeal No.15 of 2019, confirming the order of the Debt Recovery Tribunal-2 of Hyderabad passed in S.A.No.126 of 2017, whereby, the Tribunal has set-aside the auction held on 21.11.2015 of the secured asset by the Bank.

2. Heard Mr. T.B.L.Murthy, learned counsel for the writ petitioner. None appeared for the respondents despite service of notice on them.

3. Brief over view of the facts leading to the lis in this writ petition may be stated as follows:

                  The writ petitioner is a Canara Bank, a body corporate constituted under the Banking companies (Acquisitions and Transfer of Undertakings) Act, 1970 (hereinafter referred to as ‘Bank’). The 1st respondent is a proprietor firm represented by its proprietor. The 1st respondent has availed loan from the Bank and the 2nd respondent stood as guarantor by offering her immovable property as security for repayment of the loan amount by the 1st respondent (hereinafter called as ‘principal borrower’). The principal borrower committed default in repayment of the loan amount. Therefore, the Bank has initiated measures under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short, ‘the Act’) and sold away the secured asset in a public auction after complying with the procedure prescribed under law. The auction was knocked down in favour of the highest bidder. The auction purchaser has deposited 25% of the sale consideration before the Bank on the date of the auction. The balance sale consideration is required to be paid by the auction purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties. The auction purchaser could not deposit the balance sale consideration within fifteen days from date of confirmation of sale of the immovable property. Therefore, the time for payment of the balance sale consideration is extended, as agreed in writing between the Bank, being the secured creditor and the auction purchaser. Thereafter, the auction purchaser has deposited the balance sale consideration and sale certificate was issued in favour of the auction purchaser.

4. The principal borrower and the guarantor have challenged the said auction held by the Bank, who is the secured creditor, before the Debt Recovery Tribunal-2 of Hyderabad on the ground that the time to deposit the balance sale consideration can be extended under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002, (for short, ‘the Rules’) only with the consent of all parties and all parties include the principal borrower and without the consent of the principal borrower that the time was extended only as per the agreement arrived at between the secured creditor and the purchaser and it is not valid under law. The said contention of the principal borrower found favour with the Tribunal. The Tribunal, after considering Rule 9(4) of the Rules, held that as there is no consent of the principal borrower given for extending the period of time to deposit the balance sale consideration that the sale held by way of auction is not valid and thereby has set aside the said sale. Aggrieved by the said order of the Tribunal, the Bank has preferred an appeal to the Debt Recovery Appellate Tribunal, Kolkata, in appeal No.15 of 2019. The Appellate Tribunal also took the same view that as the consent of the principal borrower is not taken for extending the period for payment of balance sale consideration, as contemplated under Rule 9(4) of the Rules, that the sale is not valid and thereby affirmed the order of the Tribunal and dismissed the appeal. Aggrieved thereby, the instant writ petition has been preferred by the Bank, being the secured creditor, assailing the impugned judgment of the Tribunal and the Appellate Tribunal.

5. The material facts of the case are absolutely not in controversy. As the principal borrower failed to repay the borrowed amount, the Bank has initiated measures under the Act and took possession of the secured asset and sold away the same in the public auction. The sale was knocked down in favour of the highest bidder. The auction purchaser has deposited 25% of the sale consideration before the Bank on the date of the auction and did not deposit the balance sale consideration within fifteen days from date of confirmation of sale of the secured asset. The Bank, with the consent of the auction purchaser, has extended the time for deposit of the balance sale consideration, as contemplated under Rule 9(4) of the Rules. According to the principal borrower, the time for payment of balance sale consideration can be extended beyond the period of fifteen days under Rule 9(4) of the Rules, as agreed upon in writing between the parties and according to him the term “parties” include the principal borrower and as such the consent of the principal borrower is also required and as his consent is not taken that the decision taken to extend the time to deposit the balance sale consideration is not valid under law and the sale is also not valid.

6. As per the version of the Bank, the consent of the principal borrower is not required to be taken under Rule 9(4) of the Rules and as the word “between the parties” is used, it is confined to the consent of two parties only and the said two parties are only the Bank, being the secured creditor and the auction purchaser and the principal borrower cannot be included in the said term “parties”, as used in Rule 9(4) of the Rules, as it is not stated in the Rule as agreed “among” the parties to include the third person.

7. Learned counsel for the petitioner submits that Rule 9(4) of the Rules, as it stood prior to amendment, says that the time can be extended as may be agreed upon in writing between the parties and it was subsequently amended with effect from 04.11.2016, clarifying that the time can be extended as may be agreed upon in writing between the purchaser and the secured creditor and as it is a clarificatory amendment that it operates with retrospective effect and the amendment applies to the present case also even though the auction and sale took place prior to the said amendment and it clearly indicates that the consent of the principal borrower is not necessary to extend the time to deposit the balance sale consideration and the period of time can be extended by agreement upon writing between the purchaser and the secured creditor and in that view of the matter, the sale that took place in the present case is perfectly valid under law. So, he submits that both the Tribunal and the Appellate Tribunal took an erroneous view and arrived at a wrong conclusion and has set aside the sale. So, he prayed to set aside the impugned orders of the Tribunal and the Appellate Tribunal and allow the writ petition.

8. Considering the controversy involved in this writ petition, the neat question of law that arises for our determination in this writ petition is whether the consent of the principal borrower is essential to extend the period of time for deposit of the balance sale consideration under Rule 9(4) of the Rules and whether the amended provision of Rule 9(4) of the Rules, which came into effect from 04.11.2016 operates with retrospective effect or not and whether the sale of the secured asset that took place in the present case is valid under law or not.

9. To answer the said question and to resolve the controversy involved in the lis, the Rule 9(4) of the Rules, as it stood prior to the amendment and after its amendment is required to be looked into and considered. Prior to the amendment, Rule 9(4) of the Rules reads thus:

                  “(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties.”

10. The amended provision, which came into effect from 04.11.2016, reads thus:

                  “(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months.”

11. The amendment that was made to Rule 9(4) of the Rules, as can be seen from the amended provision, is only relating to explanation as to who are the parties who can agree for extension of the period of time to deposit the balance sale consideration. In the original provision, as it stood prior to its amendment, it is only stated that the time can be extended as agreed upon in writing between the parties. Who are those parties is not made clear in the said provision. Therefore, the Tribunal has taken a view that the consent of the principal borrower is also required. The same view was taken by the Appellate Tribunal also. As the consent of the principal borrower is not taken, the Tribunal has set aside the sale and the same was confirmed by the Appellate Tribunal. But, both the Tribunal and the Appellate Tribunal did not make any effort to interpret the said term or expression “between the parties” as used in the original provision, as it stood prior to its amendment. Both the Tribunal and the Appellate Tribunal simply held that as the consent of the principal borrower is not taken that the period for deposit of the balance sale consideration cannot be extended.

12. The said view taken by both the Tribunal and the Appellate Tribunal that the consent of the principal borrower is essential for extending the period of time to deposit the balance sale consideration under Rule 9(4) of the Rules, in our considered view, is not correct. The same is clarified by way of an amendment effected to Rule 9(4) of the Rules. By way of an amendment, the Parliament has removed the term and the  expression “between the parties” in the Rule and included the term “between the purchaser and the secured creditor”. Therefore, as per the amended provision, it is made clear that the period of time can be extended as may be agreed upon in writing between the purchaser and the secured creditor. So, it is clear that it was not the intention of the Parliament even earlier that the consent of the principal borrower is required for the purpose of extending the period of time under Rule 9(4) of the Rules. As the term “between the parties” used in the earlier provision was not defined, the Parliament, by way of the amendment, has clarified it and removed the ambiguity stating that the time can be extended as agreed between the purchaser and the secured creditor only. The Apex Court in the case of Varimadugu Obi Reddy v. B.Sreenivasulu and others ((2023) 2 SCC 168) , has considered the pre-amended provision of Rule 9(4) and the amended provision of Rule 9(4) and held at para No.42 as follows:

                  “It clearly manifests that the pre-amended Rule 9(4) refers to the period of fifteen days for confirmation of sale or such extended period, but the outer limit has not been defined and that appears to be not as sacrosanct and the period can be extended, as agreed upon in writing between the parties. In sequel thereto, if the time stands extended, the auction purchaser would not be considered to be a defaulter, as referred under Rule 9(5) of the Rules and if the amended provisions are being taken note of, of which reference has been made, effective from 04.11.2026, however, may not be relevant as the auction in the instant case was held in March, 2015, but the fact remains that by an amendment, the legislature with its consciousness has clarified that the agreement has to be between the purchaser and the secured creditor exceeding fifteen days but in any case may not exceed three months although who are the parties to the agreement is not clear in the pre-amended Rule 9(4) of the Rules.”

13. Earlier, while considering a case under pre-amended provision of Rule 9(4) in Sri Siddeshwara Cooperative Bank Ltd. and another v. Ikbal and others2, the Apex Court was of the view that the period which is referred to in Rule 9(4) is not that sacrosanct and may be extended if there is a written agreement between the parties and since parties to the written agreement is not defined in Rule 9(4), the Court was of the view that it covers into its fold the secured creditor, the auction purchaser and the borrower. But subsequently the legislature, taking into consideration the judgment in Sri Siddeshwara Cooperative Bank Ltd. case, made its intention clear by making an appropriate amendment in Rule 9(4) of the 2002 Rules, which came into effect by a notification dated 03.11.2016, which came into effect from 04.11.2016. This has been noticed by the Apex Court at para No.43 of the judgment in the above Varimadugu case. So, even though, in Sri Siddeshwara Cooperative Bank Ltd. Sri Siddeshwara Cooperative Bank Ltd. case, the term “as may be agreed upon in writing between the parties”, as used in the un-amended provision of Rule 9(4) is interpreted stating that it includes the borrower also within its ambit along with the secured creditor and the auction purchaser, the said term is amended in the year 2016 in Rule 9(4), clarifying that the parties to agreement means the secured creditor and the auction purchaser only. The borrower is not included within the ambit of the said term “between the parties”. It has excluded the borrower in the amended Rule 9(4).

14. Thus, it is clear from the ratio laid down in the aforesaid judgment that the amendment of Rule 9(4), which came into effect from 04.11.2016 stating that the time can be extended by agreement between the secured creditor and the purchaser, is clarificatory in nature. It is now well settled law that clarificatory amendments always operate with retrospective effect. The said legal position has been dealt with by a three Judge Bench of the Apex Court in the case of Zile Singh v. State of Haryana and others((2013) 10 SCC 83). Para Nos.13 and 14 of the said judgment are relevant in the context to consider. For better appreciation, para Nos.13 and 14 of the judgment are extracted hereunder and it reads as follows:

                  “13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only 'nova constitutio futuris formam imponere debet non praeteritis' - a new law ought to regulate what is to follow, not the past. (See: Principles of Statutory Interpretation by Justice G.P. Singh, Ninth Edition, 2004 at p.438). It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid, p.440).

                  14. The presumption against retrospective operation is not applicable to declaratory statutes In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is ‘to explain’ an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended.......An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid, pp.468-469) @ page-SC5104”

15. The Supreme Court in the case of NHPC Ltd v. State of Himachal Pradesh and others(2023 AIR (SC) 4457) also at para No.11 of the judgment held that it is open to the legislature to alter the law retrospectively.

16. Thus, from the law enunciated in the aforesaid judgments, to decide whether a particular amendment brought in the statute operates prospectively or retrospectively, the legal position is made very clear that when by way of amendment, if the statute did not take away the right or obligation of the parties and if the amendment is only clarificatory in nature explaining the anomaly in the un-amended provision or the ambiguity in the un-amended provision by way of clarification brought in in the amended provision then the said amended provision always operates with retrospective effect and it applies to the past transactions also.

17. As the Supreme Court clearly held in Varimadugu case that the amendment effected to Rule 9(4) of the Rules, which came into effect from 04.11.2016, is clarificatory in nature, explaining as to who are the parties relating to the wording used in the previous provision “between the parties”, stating that they are the secured creditor and the purchaser, it is to be held that the said amendment is retrospective in nature and applies to the present sale that took place on 21.11.2015 also. Therefore, in view of the said clear legal position, we have absolutely no hesitation to hold that even under the earlier provision, as it stood prior to amendment of Rule 9(4) of the Rules, the principal borrower is not a necessary party, whose consent is required for extending the period of time. Although, Varimadugu case was referred to by the Appellate Tribunal, it failed to notice that the Supreme Court held in the said judgment that the amendment to Rule 9(4) of the Rules is clarificatory in nature. The Appellate Court also did not consider the law relating to the preposition that clarificatory amendments are always retrospective in nature to resolve the issue that is before it. So, the Appellate Tribunal arrived at an erroneous conclusion and upheld the judgment of the Tribunal.

18. After considering the amended provision of Rule 9(4) of the Rules and the law explained by the Supreme Court that it is a clarificatory amendment and as per the law laid down by the three Judge Bench of the Supreme Court that clarificatory amendments are always retrospective in nature, we have absolutely no hesitation to hold that the amendment applies to the present sale also. Therefore, the sale cannot be held to be bad in law for want of consent of the principal borrower. The interpretation of any statute or amendments in the statute shall always be made keeping in view the object of the enactment and the intention of the legislature. The object of the Act is to enable the Banks to recover the loan amount, which is the public money, by following the procedure prescribed in the Act, from the borrowers, who committed default in repayment of the loan amount. Keeping in view the said object of the enactment in mind and taking it into consideration, the provisions of the Act and the amended provision of the Act are to be interpreted. Both the Tribunal and the Appellate Tribunal have committed a manifest error of law in not properly understanding the purport of Rule 9(4) of the Rules, both prior to its amendment and subsequent to amendment and took an erroneous view. Therefore, the impugned judgments of both the Tribunal and the Appellate Tribunal are clearly unsustainable under law and they are liable to be set aside.

19. In fine, the Writ Petition is allowed. The impugned order of the Appellate Tribunal, confirming order of the Tribunal, setting aside the sale held in the auction, is hereby set aside. The writ petitioner-Bank is at liberty, as a secured creditor, to proceed further, relating to the said sale that took place as per law. There shall be no order as to costs.

As a sequel, Interlocutory Applications pending, if any, shall stand closed.