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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 04TH DAY OF DECEMBER, 2019
BEFORE
THE HON'BLE Mr.JUSTICE B.VEERAPPA
WRIT PETITION No.50882 OF 2019 (GM-RES)
BETWEEN:
Mr.C.N.SHANTHA KUMAR, S/O Mr.N.NARAYANA REDDY, AGED ABOUT 48 YEARS, RESIDING AT NO.69, 4TH ‘A’ CROSS, 36TH MAIN, B.T.M.LAYOUT, 1ST STAGE, BENGALURU – 560 068.
...PETITIONER
(BY SRI D.R.RAVISHANKAR, ADVOCATE FOR SRI N.SURESHA, ADVOCATE)
AND:
THE GOVERNOR,
RESERVE BANK OF INDIA,
NEW CENTRAL OFFICE BUILDING,
SHAHID BHAGATH SINGH ROAD,
FORT, MUMBAI – 400 001.
THE CHAIRMAN AND MANAGING DIRECTOR, BANK OF MAHARASHTRA, HAVING ITS OFFICE AT LOKMANGAL, 1501, SHIVAJINAGAR, PUNE – 5.
THE AUTHORIZED OFFICER, BANK OF MAHARASHTRA, ASSET RECOVERY BRANCH,
2 NO.13, PAXAL TOWERS, K.R.ROAD, OPP : VANIVILAS HOSPITAL, BENGALURU – 560 002.
Mr.RANJEETH.K.S.
} carried out
NO.411, RING ROAD,
} amendment
NIJINGAPPA LAYOUT,
} as per order
DAVANAGERE SOUTH EXTENSION, } of this Court
DAVANAGERE.
} dt: 26.11.2019
Mr.PRAMOD BHANDARI, RESIDING AT NO.5, 3RD FLOOR, MIDDLE SCHOOL ROAD, V.V.PURAM, BENGALURU – 560 004.
…RESPONDENTS
(BY SRI K.SHASHIKIRAN SHETTY, Sr.COUNSEL FOR SRI VIGNESH SHETTY, ADVOCATE FOR R2 & R3; SRI VIVEK.S.REDDY, Sr.COUNSEL FOR SRI S.ISMAIL ZABIULLA, ADVOCATE FOR R4 & R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OF MANDAMUS TO THE 2ND AND 3RD RESPONDENTS BANK TO REVALIDATE THE EXTENSION OF OTS LETTER DATED 10.05.2019 AT ANNEXURE – ‘G’ ISSUED BY RESPONDENT NO.3, ETC.,
THIS WRIT PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: * * * *
ORDER
The petitioner has filed the present writ petition seeking for the following reliefs :-
a) Issue writ of mandamus to the 2nd and 3rd Respondent Bank to revalidate the extension of OTS letter dated 10.05.2019 vide Ref.AK78 /ARB/BAN/RIHAYAT/HOTELKEERTHEXT/2019-20 at Annexure – ‘G’ issued by 3rd Respondent ;
b) Issue writ of mandamus to the 2nd and 3rd Respondent to consider extension of the OTS proposal submitted by the petitioner dated 28.08.2019 at Annexure – ‘H’ by petitioner;
c) Quash/set aside the sale notice dated 05.09.2019 issued by the 3rd Respondent as the same is arbitrary and in violation of the SARFAESI Act vide Annexure – ‘J’ published in New Indian Express; and
d) Such further and other reliefs as this Hon’ble Tribunal may consider fit and proper in the facts and circumstances of the case.
4 2. The factual matrix of the case is that the petitioner has availed credit facility from the 3rd Respondent Bank in the form of mortgage loan to an extent of Rs.5 Crores in the year 2013 for the purpose of improvement of his business, by mortgaging title deeds in respect of the land measuring 0-30 guntas in Sy.No.94 of Chandapura Village, Attibele Hobli, Anekal Taluk together with building constructed thereon. Thereafter, the petitioner incurred heavy loss due to demonetization and other factors. Hence, the petitioner could not comply with the terms agreed under the sanction and even though this aspect was brought to the notice of the 3rd Respondent Bank with a request to restructure or to grant time to regularize the account, the 3rd Respondent Bank without considering the request of the petitioner initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (for short, SARFAESI Act).
5 3. Though, the petitioner made several efforts to settle the disputes and has paid substantial amount to the 3rd Respondent Bank, without considering the same, the 3rd Respondent Bank proceeded to sell the schedule property and issued a sale notice dated 19.06.2018. The petitioner challenged the said sale notice before the Debt Recovery Tribunal in S.A.No.258/2018. Subsequently, the 3rd Respondent Bank withdrawn the said sale, for the reason that the auction bidder did not come forward to pay the entire amount.
In the meantime, the sisters of the petitioner had filed a suit for partition in O.S.No.1099/2018 in respect of the schedule property before the Civil Judge and JMFC, Anekal. The petitioner appeared and contested the said suit. Subsequently, the 3rd Respondent Bank was also impleaded in the said suit. The Court below was pleased to grant an order of temporary injunction against the petitioner to maintain status-quo.
6 5. Inspite of heavy financial burden, the petitioner, in order to safeguard the property offered One Time Settlement letter to the 3rd Respondent Bank to allow him to clear the dues under the OTS Scheme. The 3rd Respondent Bank issued a letter dated 18.01.2019 for settlement under OTS Scheme agreeing for a sum of Rs.5 Crores instead of Rs.8,55,11,509/-. Accordingly, the petitioner deposited a sum of Rs.75 Lakhs with the 3rd Respondent Bank through the Demand Drafts dated 12.02.2019 and 13.02.2019. Thereafter, as the petitioner could not mobilize the funds in time, in order to discharge his liability within time, approached the 3rd Respondent Bank for extension of time to pay the OTS amount and the 3rd Respondent Bank issued a letter stating that “the request for extension will be subject to revalidation by the higher authorities”. Despite of follow ups, the 3rd Respondent Bank could not communicate the petitioner for having revalidate the request for extension by the higher authorities.
7 6. Though, the petitioner had deposited a sum of Rs.75 Lakhs as a part of OTS consideration, the 3rd Respondent Bank proceeded to sell the schedule property and published sale notice dated 05.09.2019, by fixing the sale on 19.09.2019. Therefore, the petitioner had approached the Debt Recovery Tribunal, Bengaluru by filing an application under Section 17(1) of the SARFAESI Act in I.R.No.3969/2019. When the matter was listed for hearing, the 3rd Respondent Bank submitted that the property was auctioned and the bidder had deposited 25% of the bid amount and the matter was posted for filing objections. Though the 3rd Respondent Bank filed its objections, has not annexed the auction proceedings and also the particulars of the auction purchasers. Therefore, the petitioner filed an application for stay of the registration of sale certificate in I.A.No.3034/2019 and the Debt Recovery Tribunal refused to consider the said application and posted the matter to 18.10.2019. On 18.10.2019, the petitioner
8 had filed an application for grant of leave to redeem the property, the said application was also not considered by the Tribunal and posted the same for objections on 23.10.2019. Again the 3rd Respondent Bank filed a memo with amount paid particulars but did not provide any particulars of the auction purchaser.
The grievance of the petitioner is that the property in question was subject matter of attachment by the Income Tax Department on 25.3.2015 and as long as the attachment subsists, it would not be open under the SARFAESI Act to over look the statutory bar for sale of the attached property under Schedule – II of the Income-tax Act. Even though the 3rd Respondent Bank accepted the OTS proposal by way of letter dated 21.02.2019 and subsequently issued a letter as per Annexure - ‘G’ dated 10.05.2019, unfortunately, the Debt Recovery Tribunal has not considered the interim application of the petitioner and consequently, auction
9 was held on 20.09.2019. Therefore, the petitioner has approached this Court for the reliefs sought for.
This Court, after hearing the learned counsel for the petitioner by an order dated 23.10.2019 granted interim stay of issuance of the sale certificate or registration of sale certificate by the 3rd Respondent Bank in favour of the auction purchaser in respect of the schedule property, subject to the petitioner depositing 50% of Rs.5 Crores under the OTS agreed and accepted by the Respondent – Bank within a period of six weeks.
Learned counsel for the petitioner submitted that in pursuance of the interim order passed by this Court on 23.10.2019, he is ready to pay Rs.1 Crore by way of Demand Draft, this day itself and remaining Rs.75 Lakhs shall be paid within one week.
Sri.Shashikiran Shetty, learned Senior Counsel for the 3rd Respondent Bank refused to accept
10 the Demand Draft and amount offered by the petitioner on the ground that the property is already sold in public auction in favour of Respondent Nos.4 and 5 on 20.09.2019 and fairly submits that since the petitioner had already approached Debt Recovery Tribunal in I.R.No.3969/2019, let the Debt Recovery Tribunal decide the matter on merits.
The said submission of the learned Senior Counsel for Respondent No.3 is placed on record.
Sri.Vivek.S.Reddy, learned Senior Counsel representing the auction purchasers – Respondent Nos.4 and 5 submitted that the petitioner cannot seek parallel remedy, simultaneously, the petitioner had already approached D.R.T. Merely because, the D.R.T. has not considered his interim application is not a ground to approach this Court to scuttle the proceedings. The petitioner has suppressed the facts that earlier he had filed a petition before this Court in
11 W.P.No.38513/2015 and this Court by its order dated 30.11.2015 dismissed the petition, without prejudice to the remedies that are available to the petitioner elsewhere. He also submitted that the sale certificate is already issued in favour of the auction purchasers on 22.10.2019.
Having heard the learned counsel for the parties, it is not in dispute that the petitioner has availed loan of Rs.5 Crores in the year 2013 from the 3rd Respondent Bank. It is also not in dispute that according to the petitioner, he has incurred heavy loss due to demonetization and other facts as stated above. It is the case of the petitioner that the Debt Recovery Tribunal has not considered the interim application filed by him and the Tribunal has adjourned the matter from time to time and it culminated in issuing sale notice by 3rd Respondent Bank on 05.09.2019. The fact remains is that by the time, the sale notice was issued, the petitioner had already approached Debt
12 Recovery Tribunal and the matter is seized before the Tribunal. Therefore, it is for the Tribunal to decide the matter on merits, after giving opportunity of hearing to both the parties. When the matter is seized before the Tribunal, it is appropriate to direct the petitioner to approach the Tribunal to proceed with the matter that is pending and also direct the Tribunal to decide the matter on merits in accordance with law.
In view of the aforesaid reasons, writ petition is disposed off. Petitioner is permitted to appear before the Debt Recovery Tribunal and Debt Recovery Tribunal is hereby directed to proceed with the case on merits after providing opportunity of hearing to both the parties.
It is needless to observe with regard to the intimation letter dated 10.05.2019 issued by the 3rd Respondent Bank to the petitioner requesting for extension of time is concerned, it is for the petitioner
13 to approach the Authorities to pursue his remedy and it is for the 3rd Respondent Bank to consider the request of the petitioner and pass appropriate orders.
All the contentions raised by both the parties to the lis are left open to urge the same before the Debt Recovery Tribunal and Debt Recovery Tribunal to pass appropriate orders on merits, in accordance with law within 15 days from the date of receipt of this order.
Since the matter is referred to Debt Recovery Tribunal. It is appropriate to direct the 3rd Respondent – Bank not to precipitate till the matter is decided on merits.
Ordered accordingly.
Sd/- JUDGE