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2014 DIGILAW 975 (PAT)

Rakesh Kumar Yadav v. Anant Kumar Jain

2014-09-10

ASHWANI KUMAR SINGH, R.M.DOSHIT

body2014
ORDER : 1. These three Appeals under Clause 10 of the Letters Patent have been preferred by one Rakesh Kumar Yadav, respondent No. 4 in CWJC No. 192 of 2013 against the common judgment and order dated 20th June 2013 passed by the learned Single Judge to allow CWJC No. 192 of 2013. Against the judgment and order passed in CWJC No. 2760 of 2013 and CWJC No. 2782 of 2013 the appellant has preferred Appeals with the leave of the Court. The subject matter of dispute in these three Appeals is one residential house situated at Mauza Kathautiya Gali, Chowk Patna City, Pargana Azimabad, PS Patna City Chowk, District Patna (hereinafter referred to as the Secured property). The Secured property was offered by the respondent No. 1 - the writ petitioner in security for the loan borrowed by his brother from the respondent-Central Bank of India (hereinafter referred to as the Bank). Admittedly, the borrower failed to repay the loan amounts. The borrower being the defaulter, the Bank proceeded to recover its outstanding dues by sale of the Secured property under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act of 2002). The Secured property was offered for sale in public auction. In public auction conducted in November 2011, the appellant purchased the Secured property for a sum of Rs. 12.96 lakh. The possession of the Secured property was handed over to the appellant in December 2012. After the possession of the Secured property was handed over to the appellant, the writ petitioner approached this Court under Article 226 of the Constitution in above CWJC No. 192 of 2013 to challenge the action of the Bank in disposing of the Secured property. 2. According to the writ petitioner, the action of the Bank was contrary to the provisions contained in the Act of 2002 and was fraudulent. The Bank had failed to serve notice of public auction to the writ petitioner and that the Secured property was grossly undervalued. 3. The Secured property appears to have been offered in security for financial assistance from the State Bank of Bikaner and Jaipur and Punjab National Bank as well. 4. The learned Advocate Mr. The Bank had failed to serve notice of public auction to the writ petitioner and that the Secured property was grossly undervalued. 3. The Secured property appears to have been offered in security for financial assistance from the State Bank of Bikaner and Jaipur and Punjab National Bank as well. 4. The learned Advocate Mr. Kumar Priya Ranjan appearing for the Punjab National Bank has vehemently submitted that it was the Punjab National Bank which was first in extending the financial assistance to the writ petitioner in 1996. The Punjab National Bank, therefore, has the first charge over the Secured property. Learned Advocate Mrs. Nilu Agrawal appearing for the State Bank of Bikaner and Jaipur has submitted that the State Bank of Bikaner and Jaipur also had extended the financial assistance to the writ petitioner and that the Secured property has been offered in security to the State Bank of Bikaner and Jaipur. The State Bank of Bikaner and Jaipur has, therefore, a charge over the Secured property. 5. Both the aforesaid Banks had initiated proceedings for recovery of their outstanding dues by sale of the Secured property. However, the aforesaid two Banks have not proceeded further in the matter. Neither they have sold the Secured property in auction; nor have they pursued any other remedy either against the borrower or against the guarantor or against the Bank. It is the Central Bank of India which has pursued the matter and sold the Secured property for a sum of Rs. 12,96,000/-. 6. The Petition was contested by the Central Bank of India and the appellant-auction purchaser. The Central Bank of India has brought on record several communications sent to the writ petitioner. The communications were received back by the Bank undelivered. The Bank has also relied upon the public notice given in daily newspaper. The writ petitioner has, in support of his claim, produced a valuation report dated 2nd January, 2013 made by one Ram Kumar Singh, a Registered Valuer. According to the said report, the Secured property was worth Rs. 69,90,000/- and was worth Rs. 58,18,000/- in 2011. 7. The learned Single Judge has relied upon the auction sale notice given by the Punjab National Bank and the State Bank of Bikaner and Jaipur and that of the Central Bank of India. According to the said report, the Secured property was worth Rs. 69,90,000/- and was worth Rs. 58,18,000/- in 2011. 7. The learned Single Judge has relied upon the auction sale notice given by the Punjab National Bank and the State Bank of Bikaner and Jaipur and that of the Central Bank of India. The upset price indicated by the two other Banks was much higher than the up-set price of Rs. 11 lakh determined by the Central Bank of India. The learned Single Judge has believed that the writ petitioner was not given due notice and that the Secured property was grossly undervalued by the Central Bank of India. Consequently, the learned Single Judge has set aside the sale made in favour of the appellant and has directed the writ petitioner to pay the outstanding amount of the Central Bank of India. So far as the dues of the State Bank of Bikaner and Jaipur and the Punjab National Bank are concerned, the writ petitioner is directed to pay the specified amounts to the said Banks. The learned Single Judge has further directed that in case the petitioner fails to pay the specified amounts, the said Banks may initiate the proceedings under the Act of 2002. The appellant has been directed to hand over the possession of the Secured property. Therefore, these Appeals. 8. Learned Principal Additional Advocate General Mr. Lalit Kishore has appeared for the appellant-auction purchaser. He has submitted that the writ petitioner had the alternative statutory remedy of appeal under Section 17 of the Act of 2002. The writ petitions in the subject matter ought not to have been entertained by the learned Single Judge. He has also submitted that the writ petitioner was at all times in the knowledge of the recovery proceedings initiated by the Central Bank of India. Even if it were believed that he had not received the communications sent by the Bank, he was aware of the proceedings at least since January 2012. There is irrefutable evidence that the petitioner was aware of the recovery proceedings since January 2012. Nevertheless, he did not take any action and allowed the matter to precipitate to the stage of handing over the possession to the appellant. For that reason also, the writ petitions ought not to have been entertained by the learned Single Judge. There is irrefutable evidence that the petitioner was aware of the recovery proceedings since January 2012. Nevertheless, he did not take any action and allowed the matter to precipitate to the stage of handing over the possession to the appellant. For that reason also, the writ petitions ought not to have been entertained by the learned Single Judge. As to the valuation of the Secured property, he has submitted that the valuation report of January 2013 produced by the writ petitioner is not reliable. It is evident that the said report was secured by the writ petitioner for the purpose of the writ petition. The day on which the appellant was in possession of the Secured property, the Registered Valuer could not have entered the Secured property without the knowledge of the appellant; nor could he have inspected the Secured property; nor could he have made the valuation. Ex-facie, the valuation report is not reliable as it does not indicate the basis upon which the valuation has been determined. 9. In support of his submissions, Mr. Lalit Kishore has relied upon the judgments of the Hon'ble Supreme Court in the matters of Madan Lal vs. State of U.P. and Others, (1975) 2 SCC 779 , United Bank of India vs. Satyawati Tondon and Others, (2010) 8 SCC 110 , Kanaiyalal Lalchand Sachdev and Others vs. State of Maharashtra, (2011) 2 SCC 782 and of this Court in the matter of The State Bank of India and Others vs. M/s Prachi Exim India Ltd. (2013) 1 PLJR 760 . 10. Learned Counsel Mr. Jitendra Singh has appeared for the respondent-writ petitioner. He has vehemently contested the Appeals. He has taken us through the voluminous records of the Appeals. He has submitted that at no point of time the Central Bank of India had intimated the writ petitioner about its intention to recover its outstanding dues by sale of the Secured property. The learned Single Judge has rightly held that the said property was grossly under-valued and that the sale was effected without intimation to the writ petitioner. He has vehemently submitted that the High Court has the discretion to entertain the writ petition in the subject matter where the alternative remedy has been provided by the Statute. In support of his contentions, Mr. Jitendra Singh has relied upon the judgments in the matters of Titaghur Paper Mills Co. He has vehemently submitted that the High Court has the discretion to entertain the writ petition in the subject matter where the alternative remedy has been provided by the Statute. In support of his contentions, Mr. Jitendra Singh has relied upon the judgments in the matters of Titaghur Paper Mills Co. Ltd. and Others vs. State of Orissa and Others, (1983) 2 SCC 433 , Union of India and Others vs. Tantia Construction Pvt. Ltd. (2011) 5 SCC 697 , Ram Kishun and Others vs. State of U.P. and Others, (2012) 11 SCC 511 and of Mathew Varghese vs. M. Amritha Kumar and Others, (2014) 5 SCC 610 . 11. We have considered the submissions made by the learned Counsel and the voluminous records before us and the above referred judgments relied upon by the learned Counsel. We are of the opinion that the writ petitioner is not as innocent as he projects himself to be. He has allowed the matter to precipitate and has remained indolent until the Secured property was sold and the possession was handed over to the appellant. The matter of valuation also is a disputed question of fact. The valuation report obtained and relied upon by the writ petitioner, prima facie, appears to be inadmissible in evidence. Its probative value also is questionable. 12. It has come on record that all the three Banks have extended the financial assistance on the security of the Secured property without the knowledge of the charge created by the other two Banks. It is apparent that the guarantor offered the same property in security to three separate Banks in three separate transactions without knowledge of one another. Further, it would be also a disputed question of fact which of the three Banks has the first charge over the Secured property. 13. We are, therefore, of the opinion that the writ petitioner ought to have availed of the statutory remedy of appeal available under Section 17 of the Act of 2002. The writ petitions raising highly disputed questions of fact ought not to have been entertained by the learned Single Judge. 14. For the aforesaid reasons, we allow these Appeals. The impugned judgment and order dated 20th June, 2013 passed by the learned Single Judge in CWJC No. 192 of 2013 is set aside. CWJC No. 192 of 2013 is dismissed on the ground of availability of statutory remedy alone. 14. For the aforesaid reasons, we allow these Appeals. The impugned judgment and order dated 20th June, 2013 passed by the learned Single Judge in CWJC No. 192 of 2013 is set aside. CWJC No. 192 of 2013 is dismissed on the ground of availability of statutory remedy alone. We allow a period of six weeks to the writ petitioner to enable him to avail of the alternative remedy of appeal under Section 17 of the Act of 2002 and obtain interim order, if any. The parties to the writ petition will maintain status quo as to the right, title, interest, possession, and the user of the Secured property for six weeks from today. CWJC No. 2760 of 2013 filed against the State Bank of Bikaner and Jaipur and CWJC No. 2782 of 2013 filed against the Punjab National Bank also are dismissed on the ground of statutory alternative remedy available to the writ petitioner.