Page 37 - BANKING FINANCE OCTOBER 2021

ARTICLE

the sale of secured asset consequent to taking over
possession (symbolic or physical as the case may be), is no
doubt required to give a notice of 30 days for sale of the
immovable asset as per Sub-rule (6) of Rule 8. 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 authorised officer to the
borrower about the intention to sell the immovable secured
asset. In other words, it is permissible to simultaneously
borrower is necessary to sell the property at below the issue notice to the borrower about the intention to sell the
Reserve Price. secured assets and also to issue a public notice for sale of
such secured asset by inviting tenders from the public or by
Rule 8 (6) provides for issuing of notice of sale informing the holding public auction. The only restriction is to give thirty
borrower of intended sale of the property. As per Rule 9(1), days' time gap between such notice and the date of sale of
if such sale is first time, 30 days notice, and 15 days notice, the immovable secured asset."
where auction is required to be conducted again due to
failure of first auction, is required to be given to the Therefore, Banks could issue simultaneous notice to the
borrower. Since Sub-rule (5) has been inserted in Rule 3 borrower in compliance of Rule 8(6) and publishing of sale
whereby attention of the borrower is invited to the Section notice in newspapers for sale of the property. Parliament
13(8) of the Act as to the time available to redeem the had amended Section 13(8) of the Act, w.e.f. 01.9.2016 to
secured assets in the demand notice itself, the requirement restrict the right of redemption only till publication of the
as to issue of notice once again to the borrower may be sale notice as there have been instances where the
superfluous. (Section 13(8) restricts the right of redemption borrowers had come forward to pay the dues even after
only till publication of sale notice). Further, the formats of conclusion of sale and the courts have allowed them to
Panchnama [Appendix I] and Possession Notice [Appendix IV] redeem the secured asset even after issuance of sale
have also been amended w.e.f. 4.11.2016 to provide a notice certificate. However, this amendment has caused confusion
therein to the borrower as under: as Rule 8(6) of the Rules has not been amended.

"The borrower's attention is invited to provisions of sub- A combined reading of amended Section 13(8) and Rule 8(6)
section (8) of Section 13 of the Act, in respect of the time appears to be that Bank has to issue 30 days notice before
available, to redeem the secured assets". sale of the property and only after the said 30 days that the
Bank could publish sale notice in newspapers for sale of the
Since the borrower is aware of the impending action by way property nullifying the effect of the benefit of the above said
of demand notice and possession notice, there is no reason Supreme Court. But, the Proviso to Rule 8(6) of the rules
as to why such notice is required to be given to the borrower have been amended, w.e.f. 18.10.2018, and inserted a
once again at the stage of sale as it would delay the recovery format, Appendix IVA, for publication of sale notice (hitherto
action of the banks. Further, since these rules have been there was no standard format for the sale notice).
held to be mandatory, any lapse in observance of these pre- Therefore, any sale notice has to be published in the same
requisites would render the action of the banks invalid. format which reads as under:

In the case of Canara Bank v. M. Amarender Reddy and Anr., "Notice is hereby given to the public in general and in
[(2017) 4 SCC 735], Supreme Court held as under, by its order particular to the borrowers and guarantors"
dated 01.11.2018, approving the action of the Bank to issue
simultaneous notice to the Borrower and publication of the This is a sufficient notice to the borrower to redeem the
Sale notice in newspapers. secured assets and there is no need for a separate notice
once again for 30 days or 15 days. Therefore, it appears
"14. The secured creditor, after it decides to proceed with from the above said amendments, it appears that the

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