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Andhra High Court · body

2019 DIGILAW 23 (AP)

Komati Srinivasa Rao, S/o Satayanrayana v. Bank of Baroda, Rep. by the Authorized Officer

2019-02-16

A.V.SESHA SAI, RAKESH KUMAR

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ORDER : A.V. Sesha Sai, J. In the present writ petition filed under Article 226 of the Constitution of India, challenge is to the order, dated 25.01.2018 passed by the Debts Recovery Tribunal, Visakhapatnam, in Securitization Application (S.A.) No.21 of 2018. Since the loan transaction of respondent Nos.2 to 6 was declared as non-performing asset (NPA), respondent No.1/bank authorities being secured creditor, pressed into service the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’). Initially on 09.12.2017, respondent No.1/bank issued a mega e-auction sale notice, proposing public auction on 28.12.2017 in respect of four items. Pursuant to the above sale notice, dated 09.12.2017, auction conducted in respect of item No.1 was finalized and in the said auction, the petitioner herein emerged as the highest bidder in respect of item No.1, which is vacant land admeasuring 489 square yards in plot Nos.79 and 80 in LP No.04/2004 in S.No.57/P in Sivajinagar, Tirumala Nagar, Vadlapudi, Visakhapatnam, for a sum of Rs.66,02,000/-. It is not in dispute that as mandated under the provisions of the SARFAESI Rules, 2002, the petitioner herein paid 1/4th of the bid amount on 28.12.2017 and the balance of 3/4th amount was also paid on 11.01.2018. Respondent No.1/bank authorities, however, did not issue sale certificate. 2. As the auction in respect of item Nos.2 to 4 of sale notice, dated 09.12.2017, did not materialize, respondent No.1/bank issued another sale notice on 08.01.2018, fixing the date of auction as 25.01.2018. Respondent No.1/bank authorities, however, did not issue sale certificate. 2. As the auction in respect of item Nos.2 to 4 of sale notice, dated 09.12.2017, did not materialize, respondent No.1/bank issued another sale notice on 08.01.2018, fixing the date of auction as 25.01.2018. Challenging the same, respondent Nos.2 to 6 herein filed S.A.No.21 of 2018 before the Debts Recovery Tribunal, showing as many as seven items as schedule properties while seeking the following relief: “In the light of facts enumerated hereinabove and for the other reasons to be submitted at the time of hearing, the applicant prays the Honourable Tribunal to: (a) To set aside sale notice Dt:08.01.2018 got published by the respondent bank on 08.01.2018, in Indian Express Daily News Paper in respect of the schedule properties; (b) to set aside all measures under the Act, for want of jurisdiction; (c) to restrain the respondent bank from acting in furtherance of orders of honourable Chief Metropolitan Magistrate Court, Visakhapatnam in Crl.M.P.No.1620/2017 either by taking physical possession of the schedule properties or otherwise; (d) to award application fee, advocate fee and costs of the application; (e) Any other relief or reliefs, which the Honourable Tribunal deems fit and proper in the circumstances of the application.” 3. The Debts Recovery Tribunal, passed an order, dated 25.01.2018 and the operative portion of the said order at para No.6 reads thus: “6. However, by taking into consideration of the memo filed by the applicants and in the interest of justice since the applicants have come forward to discharge the entire outstanding amount to the respondent bank as per the schedule given in the memo in respect of the loan accounts of 1st and 5th applicants, it would be appropriate to given an opportunity to the applicants to liquidate the entire outstanding amount to the respondent bank as agreed by the applicants as per statement given in the memo stated supra in respect of 1st and 5th applicants as per respective outstanding as mentioned in the sale notice, dated 08.01.2018 concerning 1st applicant and demand notice, dated 10.10.2017 concerning 5th applicant. Therefore, it is directed to the applicants/petitioners to discharge and pay the entire outstanding amount due to the respondent bank concerning the loan account of 1st applicant and 5th applicant in the following manner i.e. 5% of outstanding amount or auction bid amount of Rs.66,02,000/- (plus interest @ 9% thereon and the SARFAESI expenses) incurred in respect of item No.2 sold by auction stated supra, to be paid by applicants by 28.02.2018, which amount is sufficient for release of item No.2. On such deposit stated above, the respondent bank is directed to release the item No.2 property and discharge from the mortgage of item No.2 immediately and on receipt of the above such deposit by the respondent bank from applicant the respondent bank is directed to refund bid amount along with interest at the rate of 9% to the auction purchaser. In the meanwhile the respondent bank is directed not to issue sale certificate to the auction purchaser and not to register the sale. In default of such deposit by applicant stated supra by 28.02.2018, the respondent bank is at liberty to proceed further according to law in respect of that item No.2. From thereafter the applicants are directed to deposit another 5% of outstanding amount by 31.03.2018, thereafter 10% of outstanding amount by 31.04.2018, thereafter 20% of the outstanding amount by 31.05.2018, thereafter 20% of the outstanding amount by 30.06.2018 and thereafter 20% of the outstanding amount by 30.06.2018, thereafter 20% of the outstanding amount by 31.07.2018 and thereafter remaining 20% of outstanding amount by 31.08.2018 into the respondent bank in respect of loan accounts of 1st and 5th applicants and the respondent bank is directed not to take further action under SARFAESI Act in respect of concerned immovable properties in respect of 1st and 5th applicants loan accounts till payment of entire outstanding due amount by applicants as stated above in the table. After payment by the applicants as stated in the memo, the respondent bank is directed to release the appropriate securities to the applicants concerning loan accounts of 1st and 5th applicants. If the applicants failed to pay any of the schedule of payments as mentioned in the memo (table), the respondent bank is at liberty to proceed further in the matter in accordance with law. With the above directions, the S.A.No.21/2018 along with stay petition I.A.No.97 of 2018 are disposed of however without costs.” 4. If the applicants failed to pay any of the schedule of payments as mentioned in the memo (table), the respondent bank is at liberty to proceed further in the matter in accordance with law. With the above directions, the S.A.No.21/2018 along with stay petition I.A.No.97 of 2018 are disposed of however without costs.” 4. In the above background, the present writ petition came to be filed before this Court, assailing the validity and legal sustainability of the said order passed by the Debts Recovery Tribunal in S.A.No.21 of 2018, dated 25.01.2018, obviously to the extent of the land purchased by the petitioner herein in the public auction conducted by respondent No.1/bank on 28.12.2017. This Court in I.A.Nos.1 and 2 of 2018, while ordering notice before admission in the writ petition, granted interim stay of proceedings in I.A.No.448 of 2018 in S.A.No.21 of 2018, under which application, respondents 2 to 6 herein sought for cancellation of the sale certificate issued by respondent No.1/bank in favour of the petitioner herein. 5. Counter affidavit is filed by respondent No.1/bank and interim suspension was also granted, as prayed for. Despite service of notice on respondent Nos. 2 to 6, there is no representation on their behalf. 6. Heard Sri Ambadipudi Satyanarayna, learned counsel for the petitioner and Sri Manohar Reddy Nandyala, learned standing counsel for respondent No.1/bank, apart from perusal of material available before this Court. 7. It is contended by learned counsel for the petitioner that the order impugned in the present writ petition, passed by the Debts Recovery Tribunal is erroneous, contrary to law and opposed to the very spirit and object of the provisions of the SARFAESI Act and the Rules framed there under. In elaboration, it is further contended by the learned counsel for the petitioner that the impugned order is totally one without jurisdiction. It is also the submission of learned counsel for the petitioner that the Tribunal erred in totally ignoring the fact that respondent Nos.2 to 6 herein did not assail the earlier sale notice, dated 09.12.2017, and sale conducted on 28.12.2017, wherein the petitioner herein emerged as the highest bidder. It is also the submission of learned counsel for the petitioner that the impugned order is violative of the principles of natural justice, since the petitioner herein was not arrayed as respondent in the Securitization Application filed by respondent Nos.2 to 6 herein. 8. It is also the submission of learned counsel for the petitioner that the impugned order is violative of the principles of natural justice, since the petitioner herein was not arrayed as respondent in the Securitization Application filed by respondent Nos.2 to 6 herein. 8. On the other hand, it is submitted by learned standing counsel for respondent No.1/bank that it is a fact that pursuant to the earlier auction notice, dated 09.12.2017, sale was conducted on 28.12.2017 wherein the petitioner herein emerged as the highest bidder and sale certificate was also issued. It is also submitted by the learned standing counsel that in the subsequent auction notification, dated 08.01.2018, the property purchased by the petitioner herein was not included. 9. In the above background, now the issue that emerges for consideration of this Court is “whether the order, dated 25.01.2018, passed by the Debts Recovery Tribunal in S.A.No.21 of 2018, in the facts of the case, is sustainable and tenable and whether the same warrants any interference of this Court under Article 226 of the Constitution of India?” 10. There is absolutely no dispute with regard to the fact that pursuant to the sale conducted by respondent No.1/bank, on 28.12.2017, in respect of the land admeasuring 489 square yards in plot Nos.79 and 80 in LP No.04/2004 in S.No.57/P in Sivajinagar, Tirumala Nagar, Vadlapudi, Visakhapatnam, the petitioner herein emerged as successful bidder for the bid amount of Rs.66,02,000/-. Admittedly, the petitioner herein paid the entire amount covered by the said public auction. A copy of the S.A.No.21 of 2018 filed by respondent Nos.2 to 6 herein is also filed as an additional material paper by learned standing counsel for respondent No.1/bank. The relief portion of the said S.A.No.21 of 2018 contained at para No.6 of the said application, in clear and unequivocal terms demonstrates, that the applicants therein, who are respondent Nos.2 to 6 herein, challenged only the sale notice, dated 08.01.2018, which admittedly did not cover the item purchased by the petitioner herein, in respect of which, auction was conducted on 28.12.2017, but the same was shown as item No.2 of the schedule to the S.A. No.21 of 2018 apart from other properties. It is also not in controversy that the petitioner herein was not arrayed as respondent in S.A.No.21 of 2018, however, the Tribunal dealt with the subject item i.e. the item purchased by the petitioner herein and granted relief in favour of respondent Nos.2 to 6. In the considered opinion of this Court, the said exercise undertaken by the Debts Recovery Tribunal, in respect of the property purchased by the petitioner herein, which was never included in the auction notice, dated 08.01.2018, is totally one without jurisdiction. It is also significant to note that passing of the impugned order the behind back of the petitioner, without giving him opportunity is also a patent violation of principles of natural justice. It is also significant to note that respondent No.1/bank authorities also issued sale certificate on 01.03.2018 and obviously because of the above mentioned transactions, further course of action was not completed by respondent No.1/bank. The above narration clearly shows that the order passed by the Tribunal, which is impugned in the present writ petition to the extent of the property purchased by the petitioner herein i.e. land admeasuring 489 square yards in plot Nos.79 and 80 in LP No.04/2004 in S.No.57/P in Sivajinagar, Tirumala Nagar, Vadlapudi, Visakhapatnam cannot sustain in the eye of law. 11. For the aforesaid reasons, the writ petition is allowed and the orders of the Debts Recovery Tribunal passed on 25.01.2018 in S.A.No.21 of 2018 to the extent of the property admeasuring 489 square yards situated in plot Nos.79 and 80 in LP No.04/2004 in S.No.57/P in Sivajinagar, Tirumala Nagar, Vadlapudi, Visakhapatnam, stands set aside and the respondent No.1/bank is directed to complete the further proceedings pursuant to the sale, dated 28.12.2017, in favour of the petitioner herein, subject to compliance of mandatory requirements of law. There shall be no order as to costs. As a sequel, the miscellaneous petitions, if any pending, shall stand closed.