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Concept of Legal Benefit in Annulment of Tender Cases

Concept of Legal Benefit in Annulment of Tender Cases

20 Temmuz 2022

Persons who can file a lawsuit for annulment of the tender are specified in Article 134/2 of the Enforcement and Bankruptcy Code, and it is conditional on the legal benefits of these people to file a lawsuit for annulment of the tender. In the provision of article 134/8 of Enforcement and Bankruptcy Code (EBC) , it is stated that “The person who requests the annulment of the tender through complaint has to prove that his interests are probable as a result of corruption.” and the person requesting the annulment of the tender must prove that he has suffered damage, in other words, he must prove that he has a legal interest in demanding the annulment of the tender.

Who May Request the Annulment of a Tender

In immovables; creditor, debtor, interested parties in the land registry and those who participate in the tender by bidding

In movables; creditor willing to sell, debtor and those who participate in the tender by bidding

The Concept of Legal Benefit

In the cases of annulment of tender, the existence of legal benefit is a condition of the lawsuit, and whether the conditions of the lawsuit are available or not is investigated ex officio at every stage of the lawsuit. If it is determined by the judge that the complainant does not have a legal interest in demanding the annulment of the tender, the case is dismissed due to procedural grounds. If the case is dismissed due to procedural grounds without going into the merits of the case, a fine cannot be imposed against the complainant. ‘’In the last sentence of article 134/2 of Turkish Enforcement and Bankruptcy Code; it is foreseen that in case the request for annulment of the tender is rejected without entering into the merits of the work, a fine cannot be imposed against the complainant. This provision of the law on fines is mandatory and should be applied ex officio since it is related to public order.’’ (Decision of the 12th Law Chamber of the Supreme Court, dated 11.02.2021, numbered 2021/349 E., 2021/1412 K.)

The concept of legal interest should be examined in each concrete case. It is fixed by the Supreme Court decisions that if an immovable is sold at or above the appraised value, the element of loss does not occur, and therefore the complainant has no legal benefit in asking for the annulment of the tender.

“… The person who requests the annulment of the tender through complaint is obliged to prove that his interests are probable as a result of corruption. Although the notification of the sales announcement made to the debtor's attorney is inadequate, according to the established Supreme Court practice, if the sales price is higher than the approximate price, no damage will occur. . It is necessary to accept that the damage element did not occur in the tender for the immovable, and the request for annulment should be rejected...” (Decision of the 12th Law Chamber of the Supreme Court, dated 18.04.2013, numbered 2013/7693 E., 2013/14984 K.)

“…In the concrete case, it is understood that the immovable with an approximate value of 1,600,000,00 TL was sold for 1,600,000,00 TL and therefore the sale price is equal to the appraised value of the immovable, and the complainant debtor does not have any complaints made duly regarding the valuation or a claim that the value was determined as low. According to the settled Supreme Court practice; If the sales price is equal to or more than one hundred percent of the appraised price, there will be no loss, therefore, it must be accepted that the loss factor did not occur in the tender. In this case, the complainant has no legal benefit in asking for the annulment of the tender…” (Decision of the 12th Law Chamber of the Supreme Court, dated 24.12.2019, numbered 2019/12882 E., 2019/18380 K.)

Although it is seen in the decisions of the Court of Cassation that there is no legal benefit due to the absence of the damage element if the immovable is sold above the appraised value, it is not possible to say that the lawsuit for annulment of the tender for every sale made above the appraised value will be rejected due to the lack of legal benefit. The point to be considered here is whether the tender is made in accordance with public order and the mandatory provisions of the law. In cases where the tender is made contrary to the mandatory provisions of the law and public order, the tender must be terminated, even if the complainant cannot prove that he has a personal interest in requesting the annulment of the tender. Because in such cases, the public also has a benefit in the annulment of the tender. (Decision of the 12th Law Chamber of the Supreme Court, dated 24.12.2019, numbered 2019/12882 E., 2019/18380 K.)

For example, in the follow-up by converting the pledge/mortgage into cash; pursuant to EBC. art.150/e, if liquidation is not requested within 6 months for vehicles and within 1 year for immovables, following the notification of the execution/payment order, and the liquidation advance is not deposited, the file will be dismissed. Since liquidation cannot be made based on a dismissed file, the element of loss has occurred, and even if the sale is made at a price above the estimated value, the complainant has a legal interest in demanding the annulment of the tender.

‘’… In addition to other complaints, the debtor, in his application to the enforcement court, requested the annulment of the tender due to the fact that the sale of the mortgaged immovable was not requested within one year, and as the petition of appeal also referred to the reasons in the initial claim, the aforementioned claim was based on article 150/e of the EBC as it stands. If the sale is not requested within the prescribed period, the execution proceeding will be dismissed, and the transactions made after this date are null and void, and the tender made after this date must be annulled for this reason alone. Despite the expiry of the liquidation request period, the execution officer’ s acceptance of the liquidation request creates a situation contrary to the aforementioned mandatory articles of the EBC. The fact that the immovable has been sold for more than its estimated value does not necessarily and alone mean that the element of loss has not occurred. In other words, in such a case, even if the immovable is sold above the estimated price, it must be accepted that the debtor has a legal interest in requesting the annulment of the tender.’’ (Decision of the 12th Law Chamber of the Supreme Court dated 21.10.2021, numbered 2021/9886 E., 2021/9351 K.)

Another point to be noted is; whether there is a timely and duly objection to the appraisal. Where the appraisal report was inadequately sent to the debtor and there is no evidence of the debtor being duly served and in the case the appraisal was objected to within the request of annulment of the tender, the valuation of the immovable is to be made first and if the appraisal is higher than the estimated value taken as a basis in the tender, annulment of the tender is decided since the debtor suffered loss, and the request is rejected if the appraisal is below the estimated value as there will be no damage suffered.

 “…According to the settled Supreme Court practice; If the sales price is higher than the appraised value, it must be accepted that the damage element did not occur in the tender. In the concrete case, although it has been understood that the immovable subject to the tender that is requested to be annulled is sold above the appraised value, it was seen that the sales announcement and appraisal notice were served unlawfully, and the claim regarding the validity of appraisal notice was accepted as an objection to the valuation. In this case, the claim against the validity of appraisal statement as the reason for annulment should be accepted as an objection to the value determined in the appraisal by the Regional Court of Justice. Therefore, if the value of the immovable to be determined by the expert or the expert committee upon the appraisal objection is higher than the estimated value taken as the basis for the tender, the annulment of the tender should be decided. At the same time, if it is below the estimated value, since the element of damage will not occur, the request for annulment of the tender should be rejected. It is not appropriate for the debtor to decide to cancel the tender on the grounds that the sale announcement of the real estate auctioned by the Regional Court of Justice is above the appraisal value and the notification of the sale announcement is unlawful…’’ (Decision of the 12th Law Chamber of the Supreme Court, dated 24.12.2019, numbered 2019/13483 E., 2019/18419 K.)

In cases where there is an allegation collusive tendering, it should not be decided that the damage element did not occur on the grounds that the sale of the immovable was made above the estimated value. It is necessary to examine the allegations of corruption and to evaluate them in the concrete case. EBC. 134/2. Pursuant to article 281 of the Turkish Law of Obligations, which should be applied by referencing the article; the fact that the tender has been rigged against the law or morality is the reason for the annulment of the tender.

Conclusion

In cases of annulment of the tender, the complainant's legal interest in filing the lawsuit is a condition of the lawsuit, and it is necessary to prove that the complainant's interests have been damaged and that damage was suffered. Otherwise, the case will be dismissed due to procedural grounds. Whether there is a legal interest or not should be examined in each concrete case.

 

 

Sinem Çiftci

 

 

 

Bibliography

1. Prof.Dr.Baki Kuru, Enforcement and Bankruptcy Law Handbook, 2nd Edition, Adalet Publishing House, ANKARA, 2013

2. 12th Civil Chamber of the Supreme Court, E.2021/349, K.2021/1412, T.11.02.2021

3. 12th Civil Chamber of the Supreme Court, E.2013/7693, K.2013/14984, T.18.04.2013

4. 12th Civil Chamber of the Supreme Court, E.2019/12882, K.2019/18380, T.24.12.2019

5. 12th Civil Chamber of the Supreme Court, E.2021/9477, K.2021/9278, T.20.10.2021

6. 12th Civil Chamber of the Supreme Court, E.2019/13483, K.2019/18419, T.24.12.2019

7. 12th Civil Chamber of the Supreme Court, E.2021/9886, K.2021/9351, T.21.10.2021

 

 

 

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