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2015 DIGILAW 238 (UTT)

Seth Industries v. Vijay bank

2015-05-14

ALOK SINGH

body2015
JUDGMENT : Alok Singh, J. 1. Present petition is preferred seeking writ of Mandamus directing the respondent to refund Rs. 34 lakhs to the petitioner along with 18 % interest and to quash the notice/order dated 27.2.2012, whereby the amount deposited by the petitioner was forfeited. Brief facts of the present case, inter alia, are that Sri Narender Singh S/o. Sri Sukhbir Singh, Proprietor of Mars Pharmaceuticals took loan from the bank, however, he was unable to repay the loan, therefore, was declared NPA; bank has earlier issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and thereafter, while exercising the power under Section 13(4) of the Act, has taken factory and machinery of M/s. Mars Pharmaceuticals in the control and possession; vide advertisement dated 12.3.2010, bids were invited to sell the plant and machinery and the property of M/s. Mars Pharmaceuticals, Plot No. 41-45, Mini Indl Estate, VIII, Pipli-Laksar, District Haridwar on the basis of “AS IS WHERE IS” and “AS IS WHAT IS” condition. The petitioner submitted his bid for Rs. Sixty Lakhs; the petitioner has deposited Rs. Twenty Lakhs on the date of opening and accepting the bid and later on again deposited Rs. Twenty Lakhs; the petitioner wrote letters to the bank on several dates including on 23.3.2012 pointing out certain irregularities therein, which read as under: “(i) The borrower did not submit papers (EM part 2) for permanent registration of the unit with DIC Roorkee for which reason transfer of property in our favour shall become problematic. (ii) The said industrial unit has made illegal encroachment on the public passage and the matter is under active consideration of the DIC to demolish the encroachment. (iii) The unit did not deposit the plan for construction of the building with the DIC and went ahead with the construction without an approved plan. (iv) The land acquired by the unit construction there upon and other assets shown in the auction process cannot be legally transferred in our favour. Bank has auctioned to us the property which includes both legal as well as illegal possessions which cannot be transferred to us in entirely. (v) There are dues against the unit of various departments, so much so that the unit has not even paid the full cost of the plot of land. Bank has auctioned to us the property which includes both legal as well as illegal possessions which cannot be transferred to us in entirely. (v) There are dues against the unit of various departments, so much so that the unit has not even paid the full cost of the plot of land. The dues towards DIC, Roorkee being cost of the land stood at Rs. 221858/- as on 31/03/2011. The dues towards Commercial Tax upto 2007-08 stood at Rs. 110051/- and the is likely to go up when the assessment for the ensuing years shall be done by the concerned Department. (vi) There seems to be some dispute regarding the period of lease. The lease deed executed on 04/02/2004 shows the period of lease as 29 years. Although the letter dated 01/07/2011 of DIC Roorkee has tried to clarify that the period of lease is 99 years but we feel there is legal lacuna in the matter. (vii) During the year 2009, M/s. Mars Pharmaceuticals had filed a writ petition in the High Court at Nainital. The Honourable Court had instructed not to proceed with the auction. The stay was vacated and the case dismissed on 14/05/09. The High Court has restored the case vide its order dated 08/04/2010. Had the matter come to our notice at the time of auction, we would have thought twice before going in for auction. The facts were purposely kept in the dark. And, this has led to the blockage of our funds and prevented us from commencement of the business in the premises in question. (viii) Prima facie, it appears that timely measures were not taken to ensure that the title to the property was proper and whether or not it was transferable to the purchaser. The extent and the location of the property were not verified and the dues of various Departments were not ascertained. The veracity of the documents in possession of the Bank was not verified.” 2. Vide letter dated 4.4.2012, the petitioner was informed by the bank that property was auctioned on “AS IS WHERE IS” and “AS IS WHAT IS” basis and all the prospective buyers were given opportunity to undertake physical inspection of the assets before submission of bids, therefore, irregularities pointed out by the petitioner are not sufficient to give more time to the petitioner to deposit balance Rs. Twenty Lakhs out of Rs. Twenty Lakhs out of Rs. Sixty Lakhs; on 27.7.2012, a legal notice was issued to the petitioner through Advocate of the bank that since the petitioner has failed to deposit balance 3 Rs. Twenty Lakhs and plant and machinery of Rs. Six Lakhs have been removed by the petitioner, therefore, balance Rs. Thirty-four Lakhs deposited by the petitioner are forfeited. Feeling aggrieved, the petitioner has approached this Court. 3. I have heard Mr. Narendra Bali, learned counsel for the petitioner, and Mr. K.K. Sah, learned counsel for the bank, and have carefully perused the record. 4. Mr. Narendra Bali, learned counsel for the petitioner, has placed reliance on the judgment of Hon'ble Apex Court in the case of Haryana Financial Corporation & Anr. V. Rajesh Gupta, AIR 2010 SC 338 and has vehemently argued that respondent bank cannot be permitted to take advantage of its own wrong; bank has mislead the respondent into making a huge deposit for a plot of land; bank has failed to remove the irregularities, as pointed out in the letter of the petitioner, dated 23.3.2012. 5. The perusal of advertisement inviting the bids would reveal that seal bids were invited to sell the plant and machinery and the property of M/s. Mars Pharmaceuticals on or before 20.3.2010. It was clearly mentioned in the advertisement that the property can be inspected by the intending bidder from 13.3.2010 to 19.3.2010 at his expenses between 11:00 a.m. and 03:00 p.m. at the address mentioned in the schedule and if required the prospective bidder can seek the assistance of Vijaya Bank, Haridwar Branch. Undisputedly, the petitioner has not pointed out any irregularity before submitting his bid and he has submitted his bid with open eyes in terms of the advertisement, wherein it was specifically mentioned that property was being sold “AS IS WHERE IS” and “AS IS WHAT IS” condition. 6. In the case in hand, soon after acceptance of the bid of the petitioner on 20.3.2010, the petitioner deposited Rs. Twenty Lakhs and, thereafter, has deposited Rs. Twenty Lakhs more and, thereafter, petitioner has removed the plant and machinery therefrom and thereafter started making correspondence with the bank for the purposes of buying time to deposit balance bid amount of Rs. Twenty Lakhs. While, in the case of Haryana Financial Corporation (supra), first of all bidder has submitted his bid for Rs. Twenty Lakhs more and, thereafter, petitioner has removed the plant and machinery therefrom and thereafter started making correspondence with the bank for the purposes of buying time to deposit balance bid amount of Rs. Twenty Lakhs. While, in the case of Haryana Financial Corporation (supra), first of all bidder has submitted his bid for Rs. Twenty Five Lakhs only and he was called for negotiation and before negotiation could commence between the bank and the bidder, letter was sent by the bidder on 29.1.1998 pointing out that premises do not have any independent appropriate passage from the road. Not only this, when negotiations were held between the bank and the bidder, wherein bidder raised his bid from Rs. Twenty Five Lakhs to Rs. Fifty Lakhs, matter of non-availability of the passage was discussed with the bank and bank seems to have given undertaking that same would be looked into. In these circumstances, Hon'ble Apex Court has held that bank cannot take advantage of its own wrong. While, as mentioned hereinbefore, in the present case, entire correspondence started after removing the plant and machinery for the purpose of buying time. Moreover, none of the irregularity pointed out in the letter dated 23.2.2012 would create doubt about the title of the property. Therefore, judgment in the case of Haryana Financial Corporation (supra) is of no help to the petitioner. 7. It is true that as per Section 55(1) of the Transfer of Property Act, the seller is bound to disclose to the buyer any material defect in the property or in the seller's title thereto; and to produce to the buyer on his request for examination all documents of title relating to the property; and to answer to the best of his information all relevant questions put to him by the buyer. 8. In the present case, bidder/buyer has not asked the bank to make available title deeds of the premises in question for inspection before submission of the bid; nor has pointed out any irregularity before submitting the bid and before removing the plant and machinery therefrom and the property was sold by the bank on “AS IS WHERE IS” and “AS IS WHAT IS” basis. Therefore, the petitioner seems to have submitted his bid with open eyes. 9. In the peculiar facts, as narrated hereinabove, compliance of Section 55(1) of the Transfer of Property Act was made by the Bank. Therefore, the petitioner seems to have submitted his bid with open eyes. 9. In the peculiar facts, as narrated hereinabove, compliance of Section 55(1) of the Transfer of Property Act was made by the Bank. Since, the petitioner has failed to deposit balance Rs. Twenty Lakhs of the bid amount within time, therefore, bank has rightly forfeited the money deposited by the buyer/petitioner. Consequently, petition fails and is hereby dismissed.