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2007 DIGILAW 676 (PAT)

Shivam Traders v. Bank Of Baroda

2007-04-03

S.N.HUSSAIN

body2007
Judgment 1. Heard learned Counsel for the petitioners and learned Counsel for respondents No. 1 to 3, namely, the Bank of Baroda and its authorities as well as learned Counsel for the private respondent No. 4, who was subsequently impleaded as he happens to be auction purchaser from the Bank. 2. This writ petition is for quashing auction sale dated 11.11.2006 made by the respondent first set in favour of respondent No. 4 with respect to secured asset, namely, land and building of the petitioners bearing Plot No. 296 (measuring 3 kathas 10 dhurs) under Khata No. 3 in Tauzi No. 5316/258 within Thana No. 9 appertaining to Circle No. 251 of, Ward No. 34, in Mauza Sheikhpura under Shastrinagar Police Station in the district of Patna and also for commanding the respondents not to interfere with the peaceful possession of the petitioners over the aforesaid premises and accept the petitioners offer for re-payment of the alleged dues of the respondent-Bank, for which the aforesaid premises was placed as secured asset under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act for the sake of brevity) and also under provisions of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the Rules for the sake of brevity). By an affidavit dated 21.11.2006, the petitioners have prayed for amendment in the reliefs by way of adding another relief for quashing letter dated 16.11.2006 (Annexure 11) issued by the authority of the Bank informing the petitioners about the aforesaid auction sale. 3. It is not in dispute that on 21.01.2002 the petitioners availed loan facility of Rs. 8 lacs at the rate of 14% interest per annum as well as penal interest on equitable mortgage of the aforesaid secured asset in favour of Bank by way of collateral security, but due to the recurrent losses etc., business was closed and the Bank was informed, whereafter on 30.09.2002 the petitioners account was declared as Non-Productive Account (NPA). Consequently the Bank issued demand notices on 30.05.2006 (Annexures 1 series) u/s. 13(2) of the Act for outstanding dues amounting to Rs. 13,82,511.00, but dues were not shown categorically. In reply thereto, the petitioners filed a show cause dated 10.07.2006 (Annexure 2) and offered one time settlement as per scheme of the Bank as the petitioners had already deposited Rs. Consequently the Bank issued demand notices on 30.05.2006 (Annexures 1 series) u/s. 13(2) of the Act for outstanding dues amounting to Rs. 13,82,511.00, but dues were not shown categorically. In reply thereto, the petitioners filed a show cause dated 10.07.2006 (Annexure 2) and offered one time settlement as per scheme of the Bank as the petitioners had already deposited Rs. 2 lacs in the loan account. But, without referring to the same, the authorities of the Bank vide letter dated 17.08.2006 (Annexure 3 series) directed the petitioners to hand over peaceful possession of the secured asset to the Bank on 30.08.2006. 4. Against the said letter, the petitioners filed C.W.J.C. No. 10564 of 2006 on 25.08.2006 after serving a copy thereof upon learned Counsel for the respondent-Bank, but immediately thereafter by letter 30.08.2006 (Annexure 4) the Bank wrote that it has taken constructive possession of the secured asset. Finally the said writ petition was disposed of on 11.09.2006 (Annexure 5) by this Court and without going into the merit of the case, liberty was given to the petitioners to move before the appellate authority within two weeks from that date for the reliefs claimed in the writ petition and also to file an application for an interim order of stay, which, if filed, was to be considered by the appellate authority in accordance with law within one week thereafter and till an order was passed by the appellate authority on the interim application, status quo was directed to be maintained. In compliance of the said order, the petitioners filed Appeal No. 7 of 2006 on 19.09.2006 before the appellate authority, namely, the Presiding Officer of the Debt Recovery Tribunal, Patna, along with an interim application bearing I.A. No. 14 of 2006 for stay of the proceeding before the authority concerned. 5. It is also not in dispute that no order was passed by the appellate authority on the interim application within one week as directed by this Court vide order dated 11.09.2006 and instead notice was issued to the respondents on 22.09.2006 fixing 16.11.2006 as the next date in the appeal. 5. It is also not in dispute that no order was passed by the appellate authority on the interim application within one week as directed by this Court vide order dated 11.09.2006 and instead notice was issued to the respondents on 22.09.2006 fixing 16.11.2006 as the next date in the appeal. In the meantime, on 05.10.2006 (Annexure 6) the authority of the Bank issued notice for auction sale of the petitioners secured asset to be held on 11.11.2006 and, thereafter, on 17.10.2006 the Bank filed an application before the appellate authority for preponement of the date of hearing in the appeal, which was allowed by the appellate authority on 31.10.2006 preponing the date of hearing to 09.11.2006. It is also not in dispute that on 09.11.2006 the matter was heard and order was reserved with respect to the interim application for stay and finally the order was pronounced at 4 P.M. on 10.11.2006 (Annexure 8) rejecting the said interim application of the petitioners. Ultimately, auction sale was held on 11.11.2006 by the respondent-Bank and its authorities, in which the petitioners did not participate and auction sale was made in favour of respondent No. 4 for Rs. 33.21 lacs and an information about the same was sent to the petitioners vide letter dated 16.11.2006 (Annexure 11). 6. From the averments of the parties and the materials on the record, it transpires that the property in question belonged to petitioner No. 3, namely, Smt. Urmila Devi and she being the guarantor, her said property was made secured asset for the purpose of loan taken by petitioners No. 1 and 2. It also transpires that although the said property was auction sold for about Rs. 33 lacs and odd but it was worth much more and as per the petitioners, its present value was Rs. 80 lacs and was auction sold for the loan amount, closing balance of which as per the Bank statement was merely Rs. 8,47,951.00 in the year 2004. 7. It is also clear from the records that according to the specific order of the High Court dated 11.09.2006 passed in C.W.J.C. No. 10564 of 2006, the interim application of the petitioners was to be disposed of by the appellate authority within one week from the date of its filing and till an order was passed on the interim application, status quo was directed to be maintained. It is not in dispute that the appeal along with the interim application for stay was filed by the petitioners on 19.09.2006 within the prescribed time as per the aforesaid order of this Court dated 11.09.2006 along with a copy of that order, but the respondents of this case, who were respondents in the appeal also, did not take any step in the said appeal, as a result of which no order could not passed by the appellate authority on the said interim application of the petitioners within the time prescribed by this Court and, thus, the order of status quo passed by this Court continued. 8. In the aforesaid facts and circumstances, it cannot be disputed that the interim application of the petitioners was pending in the said appeal and the order of status quo passsed by this Court was continuing and the appellate authority had fixed 16.11.2006 as the next date in the appeal for hearing the said interim application, but in the meantime on 05.10.2006 (Annexure 10), auction notice was issued by the respondents, namely, the authorities of the Bank fixing 11.11.2006 as the date for auction sale of the secured assets. It is quite apparent that the authorities of the Bank were fully aware of the order of this Court dated 11.09.2006, the pendency of the appeal and the interim application filed therein and also about the order of the appellate authority dated 22.09.2006 fixing 16.11.2006 as the next date in the appeal, but inspite of that they issued the said auction notice dated 05.10.2006, which is clearly in the teeth of the order of status quo passed by this Court. No occasion at all could be shown by the respondents for issuing such auction notice in violation of the specific direction of this Court. They could have first taken steps for early disposal of the interim application filed by the petitioners in the appeal before the authority concerned and only when the said interim application was dismissed, they could have been legally entitled to issue such auction notice. 9. Furthermore, the respondents also could not satisfy by any valid reason as to how on 05.10.2006, they presumed that by 11.11.2006 the interim application of the petitioners would be dismissed by the appellate authority. 9. Furthermore, the respondents also could not satisfy by any valid reason as to how on 05.10.2006, they presumed that by 11.11.2006 the interim application of the petitioners would be dismissed by the appellate authority. In this regard, the respondents have absolutely failed to show any justification for getting the date fixed in the appeal preponed by merely one week i.e. from 16.11.2006 to 09.11.2006, hence it becomes apparent that they have done that only with a view to suit the persons concerned as the date for holding the auction sale was pre-planned by them as 11.11.2006. 10. It is not denied by the respondents that they had received letter/show cause from the petitioners dated 10.07.2006 (Annexure 2), in which the petitioners had offered One Time Settlement as per the scheme of the Bank itself, but the said offer was never considered by the Bank or its authorities although they were legally duty bound to do the same. The respondent-Bank and its authorities merely stated in their letter dated 17.08.2006 (Annexure 3) that they had earlier considered the said matter and had conveyed to the petitioners that the said offer was not acceptable to them vide Banks letter no. NIL dated NIL. Neither the respondents could produce any such letter, nor even the date thereof could be disclosed by them. It is quite strange that a Bank and that also a nationalized Bank, is claiming that they do not know either the number or the date of the letter sent by the Bank itself to the petitioners. Hence it is apparent that they had not sent any, such letter and only to fill up the lacuna and to escape the provisions of law, they have made such frivolous and false plea before this Court. This clearly shows the bias and prejudicial attitude of the authorities of the Bank towards the petitioners. 11. It is also not denied by the respondents that they had received communications and letters from the petitioners on 9.11.2006, 11.11.2006 and 13/30.11.2006 for allowing them to deposit the entire due amount in the bank. But there is no material on record to show that the respondents either replied those communications or letters or even considered those matters although they were legally bound by specific provisions of law, to consider such communications and take steps accordingly. 12. But there is no material on record to show that the respondents either replied those communications or letters or even considered those matters although they were legally bound by specific provisions of law, to consider such communications and take steps accordingly. 12. The plea of the respondents that the petitioners never tendered or paid the amount in question and merely filed petitions is also not tenable as unless the petitioners petition/representation is considered and considered favourably, there was no occasion for them to make any payment or deposit, specially when the authorities concerned were bent upon to get their secured assets auction sold without replying to their petitions/representations. Thus, it is quite apparent that the respondents not only disregarded the specific orders of this Court but also violated the specific provisions of law; such as Sec. 13(3-A) and Sec. 13(8) of the Act. 13. Other objection raised by learned Counsel for the respondents that the petitioners did not even deposit the earnest money necessary for taking part in the auction is similarly frivolous and misconceived as auction itself being illegal, collusive and against the specific directions of this Court, which was intended to be challenged by the petitioners, there was no occasion for them to take part in the said auction or to deposit any earnest money. 14. It was also contended by learned Counsel for the respondents that order dated 10.11.2006 passed by the appellate authority under the provision of Sec. 17 of the Act rejecting the petitioners interim application for stay is not under challenge and hence the auction sale held on 11.11.2006 cannot be held to be bad. In this regard it is quite apparent that there was no occasion for the petitioners to challenge the said interim order of the appellate authority in the instant writ case as the said order is appealable before the Appellate Tribunal under the provision of Sec. 18 of the Act. Moreover, it has already been held above that the entire matter appears to be pre-planned by the respondents to violate the order of this Court dated 11.09.2006 (annexure-5) as the order was passed by the appellate Tribunal on 10.11.2006 (annexure-8) and immediately on the next date the impugned auction sale in question was held. 15. Moreover, it has already been held above that the entire matter appears to be pre-planned by the respondents to violate the order of this Court dated 11.09.2006 (annexure-5) as the order was passed by the appellate Tribunal on 10.11.2006 (annexure-8) and immediately on the next date the impugned auction sale in question was held. 15. In addition to the aforesaid facts and circumstances, admittedly, the said auction sale of the secured assets was fixed on 11.11.2006 by the Bank and its authorities vide auction notice dated 05.10.2006 (Annexure 6), which itself is held to be illegal and also violative of the specific order of this Court dated 11.09.2006 (Annexure 5), hence the auction sale dated 11.11.2006 cannot be sustained in law. Accordingly, the auction notice dated 05.10.2006 (Annexure 6) as well as the auction sale in question (dated 11.11.2006) of the secured assets of the petitioners as well as the Banks letter dated 16.11.2006 (Annexure 11), by which information about the said auction sale was given, are hereby quashed. 16. The claim of the petitioners has throughout been that they are ready and willing to pay the dues on the basis of One Time Settlement and before this Court also they have specifically stated that they are ready and willing to immediately pay the entire due amount to the Bank, but their petitions/show cause and communications were never heard or considered by the respondent-authorities, hence the Bank and its authorities concerned are directed to consider in accordance with law the said petitions/show cause and communications of the petitioners and pass a specific order in that regard within one month from the date of receipt/production of a copy of this order before the authority concerned. 17. In the result, this writ application is allowed, with the aforesaid directions, but in the circumstances of this case there will be no order as to cost.