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2020 DIGILAW 41 (AP)

Ch. Uma Maheshwari v. State Bank of India

2020-01-22

M.GANGA RAO, RAKESH KUMAR

body2020
JUDGMENT : Rakesh Kumar, J. 1. Since in both the writ petitions the parties, and the reliefs sought for, are almost similar, both these writ petitions, with the consent of learned Counsel for parties, were taken up together and are being disposed of by this common order. 2. The petitioner, who is none else but the daughter of guarantor of the secured properties, regarding which, initially, order under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act') was passed, had filed a writ petition vide WP No. 38662 of 2018 under Article 226 of the Constitution of India praying to declare the action of 1st respondent-State Bank of India/secured creditor in obtaining physical possession of petitioner's site with mangalore tiled roof shed existing therein i.e., an extent of 496 square yards existing towards the north western corner of Ac. 0.50 cents with an old tiled house bearing Door No. 16-25-8/1 in TS No. 1965/5/6, Sambamurthy Nagar, near ESI Hospital, Kakinada, East Godavari District. The petitioner has asserted that the respondent-bank had taken possession pursuant to the order, dated 7.8.2018, passed in Crl. M.P. No. 240 of 2018, by the learned Chief Judicial Magistrate, East Godavari at Rajamahendravaram. The said order was passed under Section 14 of the SARFAESI Act. Prior to filing of the instant writ petition by the petitioner, her mother viz., Mandapati Rajeswari, who is 2nd respondent herein, had filed a writ petition Vide No. 33083 of 2018 in the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh against the very same order, which was passed under Section 14 of the SARFAESI Act, in which initially an order of status-quo was passed. However, finally, after finding that the respondent-bank had produced affidavit, which was filed in terms of Section 14(1) of the SARFAESI Act, a Division Bench of the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh by order, dated 1.10.2018, dismissed the said writ petition. However, finally, after finding that the respondent-bank had produced affidavit, which was filed in terms of Section 14(1) of the SARFAESI Act, a Division Bench of the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh by order, dated 1.10.2018, dismissed the said writ petition. It appears that after dismissal of the said writ petition, on 1.10.2018, which was filed by the mother of the petitioner, who is 2nd respondent herein, the petitioner filed the present writ petition i.e., WP No. 38662 of 2018 only on 25.10.2018 claiming as if the 1st respondent-bank was taking possession of her land to the extent of 496 Square yards, which fell to her share as per deed of gift prepared by her mother, 2nd respondent herein. On 26.10.2018, a Division Bench of the High Court of Judicature at Hyderabad while granting time to learned Standing Counsel for the respondent-bank, had observed as follows: "... The only point to be considered if at all, is as to whether the possession notice and the order under Section 14 of the Securitization Act were confined only to the land of the extent of 1924 Square yards and as to whether the possession is sought to be taken on a larger extent than what was mortgaged to the Bank." 3. By subsequent order, a Division Bench of the High Court of Judicature at Hyderabad, on 6.12.2018, had further observed as follows: "Despite the matter undergoing two adjournments after Sri K.B. Ramanna Dora, learned Standing Counsel for the first respondent bank, was asked to get instructions, we find that no instructions are forthcoming and Sri Kiran Kumar, learned Counsel, representing Sri KB. Ramanna Dora, learned Standing Counsel, again seeks an adjournment to get instructions. Sri P. Rajesh Babu, learned Counsel for the petitioner, would state that having taken possession of the petitioner's property in addition to the mortgaged property, the first respondent is now in the process of selling the same by way of a public auction and irreparable injustice would be caused to the petitioner if her property is also delivered to the auction purchaser. In that view of the matter, there shall be a direction to the first respondent to undertake measurement of the land that has been taken possession of and in the event it is found to be in excess of 1924 Square yards as set out in the auction sale notice issued by the bank, the excess extent, if found to be belonging to the petitioner, shall be redelivered to her. This exercise shall be undertaken prior to the delivery of the auctioned land to the successful bidder, if any." 4. Even before compliance of the order, dated 6.12.2018, regarding measurement of the land in question, the petitioner, during pendency of the present writ petition, filed another writ petition i.e., WP No. 3079 of 2019 on 7.3.2019, in which on 8.3.2019, while directing for issuance of personal notice by registered post with acknowledgment due and to post the matter on 22.3.2019, a Division Bench of this Court i.e., High Court of Andhra Pradesh at Amaravati observed as follows: "... The sale if any conducted shall not be confirmed or third party interest created by the respondents, for a period of three weeks from today." 5. Despite receipt of service report, the writ petition was not listed and thereafter on 2.1.2020, WP No. 3079 of 2019 was listed and adjourned. Finally, on 8.1.2020, WP No. 3079 of 2019 was listed side by side of WP No. 38662 of 2018. In WP No. 3079 of 2019, the petitioner has prayed to declare the action of 1st respondent in issuing auction notice, dated 19.2.2019, which was scheduled to be held on 11.3.2019 over the property "all part and parcel of 1924 Sq. yards of residential site located at Door No. 16-25-8/1 with T.S. No. 1965/5/6, Sambamurthy Nagar, Kakinada, belonging to Smt. M. Rajeswari vide Sale Deed No. 7278/1981, dated 20.8.1981", without measuring the total land and separating the petitioner's property i.e., an extent of 496 Sq. yards existing towards north western corner of Ac. yards of residential site located at Door No. 16-25-8/1 with T.S. No. 1965/5/6, Sambamurthy Nagar, Kakinada, belonging to Smt. M. Rajeswari vide Sale Deed No. 7278/1981, dated 20.8.1981", without measuring the total land and separating the petitioner's property i.e., an extent of 496 Sq. yards existing towards north western corner of Ac. 0.50 cents with an old tiled house bearing Door No. 16-25-8/1, in TS No. 1965/5/6, Sambamurthy Nagar, near ESI Hospital, Kakinada, East Godavari District, still holding possession of the petitioner's property alongwith 2nd respondent's property, though directed by this Hon'ble Court as per interim order dated 6.12.2018 in IA No. 1 of 2018 in WP No. 38662 of 2018 filed by the petitioner, as illegal, arbitrary, in violation of Section 13 of the SARFAESI Act and Rules 8 and 9 of the Security Enforcement Rules 2002 and in violation of the fundamental rights of the petitioner and principles of natural justice, consequently prayed for directing the 1st respondent not to hold auction either on 11.3.2019 or any other date without separating/dividing the petitioner's property i.e., an extent of 496 Sq. yards existing towards north western corner of Ac. 0.50 cents with an old tiled house bearing Door No. 16-25-8/1 in TS No. 1965/5/6/, Sambamurthy Nagar, near ESI Hospital, Kakinada, East Godavari District, ancillary and for other incidental reliefs. 6. Sri P. Rajesh Babu, learned Counsel for the petitioner, has taken us to number of documents including some of the photographs in writ petitions with a view to persuade the Court as if the land which was gifted to her by 2nd respondent i.e., her mother/guarantor was being taken possession by the respondent-bank. Learned Counsel submits that the action of the respondent-bank was completely illegal and as such he further argued that since direction given by a Division Bench in WP No. 38662 of 2018 regarding measurement of the land was not carried out and auction notice was issued, the petitioner was constrained to file WP No. 3079 of 2019. Accordingly, learned Counsel for the petitioner has prayed for granting relief which has been sought for in both the writ petitions and not to disturb her peaceful possession over the land measuring 496 Square yards. 7. Sri K.B. Ramanna Dora, learned Counsel for the respondent-bank, has opposed both the writ petitions and argued that the respondent-bank has never taken possession of petitioner's land. 7. Sri K.B. Ramanna Dora, learned Counsel for the respondent-bank, has opposed both the writ petitions and argued that the respondent-bank has never taken possession of petitioner's land. The property which was mortgaged by 2nd respondent as a guarantor is only subject-matter in the SARFAESI proceedings. According to him, the petitioner has filed these writ petitions with a view to unnecessarily delay the action taken by the respondent-bank under the SARFAESI Act. He further argued that in compliance of the order passed in WP No. 38662 of 2018, the land in question was got measured in the presence of petitioner and a map was also prepared and the land allotted to the petitioner through deed of gift has not been touched. Copy of map has also been brought on record alongwith the counter-affidavit. 8. Besides hearing learned Counsel for both the parties, we have minutely examined the material available on record. In WP No. 3079 of 2019, the respondent-bank has filed a detailed counter-affidavit. 9. After hearing learned Counsel for both the parties, orders were reserved on 8.1.2020. 10. Before proceeding further, it would be apt to notice as to how the land in question was mortgaged by 2nd respondent, mother of the petitioner, as guarantor for the loan to the secured creditor i.e., respondent-bank. The respondent-bank had sanctioned loan of Rs. 5,0067,521/- and claimed interest and since, in the said loan, 2nd respondent, mother of the petitioner, stood as guarantor, vide Account Nos. 62114315401 and 62114641151, all the loan documents were executed in favour of the respondent-bank for fetching loan. Since even after utilization and availing credit facility from the respondent-bank, the borrower failed to repay the loan amount as per the agreement, the loan account became Non-Performing Asset and declared as NPA. Accordingly, the respondent-bank initiated recovery proceedings under the provisions of SARFAESI Act and issued demand notice on 9.7.2014 to repay the outstanding loan of Rs. 5,00,67,521/- as on 7.7.2014. The said amount was to be paid as per the notice within a period of 60 days from the date of receipt of notice with further intimation that failure to make payment may constrain the respondent-bank to take action under Section 13(4) of the SARFAESI Act. 5,00,67,521/- as on 7.7.2014. The said amount was to be paid as per the notice within a period of 60 days from the date of receipt of notice with further intimation that failure to make payment may constrain the respondent-bank to take action under Section 13(4) of the SARFAESI Act. Despite the borrower after noticing failed to pay the amount within the prescribed period, the respondent-bank filed petition before the learned Chief Judicial Magistrate, Rajahmundry for taking one or more measurements as prescribed under Section 13(4) of the SARFAESI Act. As on the date i.e., 15.7.2018, the total recoverable amount had come to Rs. 8,03,91,084/- only. After filing of the aforesaid petition by the respondent-bank, it was numbered as Crl. M.P. No. 240 of 2018. The said petition was filed before the learned Chief Judicial Magistrate alongwith all the relevant documents. Thereafter, on 8.8.2018, learned Chief Judicial Magistrate, by exercising power under Section 14 of the SARFAESI Act, appointed an Advocate Commissioner to take physical possession of the schedule property from the borrower/guarantor and to deliver the same to the secured creditor/respondent-bank. After the order dated 8.8.2018 passed by learned Chief Judicial Magistrate in Crl. M.P. No. 240 of 2018, the guarantor/2nd respondent, who is the mother of the petitioner, filed writ petition vide WP No. 33083 of 2018 in the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh. Initially, in the said matter, status-quo order was passed. However, finally, by an order, dated 1.10.2018, WP No. 33083 of 2018 stood dismissed. It would be apt herein to quote the order, dated 1.10.2018, passed in WP No. 33083 of 2018, which has been brought on record in WP No. 38662 of 2018: "Ramesh Ranganathan and Mrs. Kongara Vijaya Lakshmi, JJ. W.P. No. 33083 of 2018 RAMESH RANGANATHAN, J:-Heard Sri P. Rajesh Babu, learned Counsel for the petitioner, and Sri K.B. Ramanna Dora, learned Counsel for the respondent-Bank and, with their consent, the writ petition is disposed of at the stage of admission. The proceedings under challenge in this writ petition is the order passed by the Chief Judicial Magistrate, Rajamahendravaram, in Crl. M.P. No. 240 of 2018 dated 7.8.2018 directing physical possession of the subject property to be delivered to the first respondent-Bank. The proceedings under challenge in this writ petition is the order passed by the Chief Judicial Magistrate, Rajamahendravaram, in Crl. M.P. No. 240 of 2018 dated 7.8.2018 directing physical possession of the subject property to be delivered to the first respondent-Bank. The sole ground, on which the said order is subjected to challenge in this writ petition, is that an affidavit, as required under the first proviso to Section 14(1) of the Securitization and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 ("the SARFAESI Act" for brevity), was not filed by the respondent-Bank; and the certified copies furnished to the petitioner do not reflect an affidavit having been filed. When the matter came up earlier, Sri K.B. Ramanna Dora, learned Counsel for the respondent-Bank, sought time to obtain instructions. Today, the learned Counsel for the respondent-Bank has placed before us a copy of the affidavit received by him by Email from the first respondent-Bank. The said affidavit is the affidavit filed in terms of the first proviso to Section 14(1) of the SARFAESI Act. A copy of the said affidavit has also been handed over to Sri P. Rajesh Babu, learned Counsel for the petitioner. Sri K.B. Ramanna Dora, learned Counsel for the respondent-Bank, would further state that, in terms of the OTS proposal made by the bank, the petitioner was given time till 30.9.2018 to make an offer for an OTS proposal; and no such offer has been received from the petitioner even as on date. As it is evident that an affidavit was filed by the first respondent-Bank, in support of the petition filed by them under Section 14 of the SARFAESI Act, the petitioner's complaint, of such an affidavit not having been filed, necessitates rejection. As this is the sole ground on which the proceedings of Magistrate, under Section 14 of the SARFAESI Act, is questioned, the writ petition is liable to be, and is accordingly, dismissed. There shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand dismissed." 11. On examination of order, dated 1.10.2018, quoted herein above, it appears that subsequently the borrower was offered OTS proposal also which was not acceded to by the borrower/guarantor. There shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand dismissed." 11. On examination of order, dated 1.10.2018, quoted herein above, it appears that subsequently the borrower was offered OTS proposal also which was not acceded to by the borrower/guarantor. After the mother of the petitioner who was guarantor failed to get any relief from the High Court, the petitioner approached this Court with a plea as if the respondent-bank had also taken possession of the land which was allotted to her through deed of gift by the guarantor, mother of the petitioner i.e., 2nd respondent. In WP No. 38662 of 2018 in Para No. 9 the petitioner has stated as if earlier WP No. 33083 of 2018 was disposed of whereas order dated 1.10.2018 supra makes it clear that the writ petition was dismissed. 12. In the counter-affidavit, which has been filed by the respondent-bank in WP No. 3097 of 2019, a categorical stand has been taken by the bank that the bank never proceeded against the petitioner's property. Further, in Para No. 7 of the counter-affidavit the bank has stated that pursuant to the interim order passed by this Court, the bank conducted survey and demarcated the lands mortgaged and the property belongs to the petitioner through survey and mapping solutions. As per the report of the Surveyor, dated 23.5.2019, the land was measured and as per the said drawing the property of the petitioner was on north western to the property mortgaged in favour of the bank. A specific stand has been taken in Para No. 7 that "the respondent-bank is not proceeding against the petitioners property". Alongwith the counter-affidavit the bank has brought on record the map prepared by the Surveyor, which is reproduced hereunder: 13. A bare perusal of the sketch plan referred herein above as well as specific statement made by the respondent-bank, it is clear that the petitioner's land has not been touched by the respondent-bank. Even then, to the reasons best known to the petitioner, in same dispute, she has filed two writ petitions. In writ petition i.e., WP No. 38662 of 2018 a direction was issued regarding measurement of the land. However, during pendency of the said writ petition, the petitioner filed second writ petition vide WP No. 3079 of 2019. It is simply misuse of the process of the Court. In writ petition i.e., WP No. 38662 of 2018 a direction was issued regarding measurement of the land. However, during pendency of the said writ petition, the petitioner filed second writ petition vide WP No. 3079 of 2019. It is simply misuse of the process of the Court. Moreover, once a proceeding under the SARFAESI Act was initiated, in normal course, the petitioner was not required to invoke writ jurisdiction of this Court which is to be invoked in extraordinary circumstances particularly, in a dispute where an aggrieved party is having a statutory remedy. In the counter-affidavit also the respondent-bank has raised preliminary objection regarding maintainability of the writ petition since the petitioner was having remedy under Section 17 of the SARFAESI Act to approach the Debts Recovery Tribunal. Time without number the Hon'ble Supreme Court has deprecated the action of the High Court in interfering in such a matter that too particularly in a dispute under the SARFAESI Act. Even prior to enactment of SARFAESI Act, in a dispute of recovery of debts to the banks and other financial institutions, the Hon'ble Supreme Court in Punjab National Bank v. Imperial Gift House, (2001) 6 SCC 569 , has observed as follows at Para No. 6: "6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act. Namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands, that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act." 14. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act." 14. Yet again the Hon'ble Supreme Court in respect of a dispute under the SARFAESI Act, in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 , observed as follows in Paragraph Nos. 43 and 55: "43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 15. Of course, in WP No. 3079 of 2019 an interim order was passed restraining the respondent-bank from confirming sale or creating third party interest which was only for a period of three (3) weeks but it was never existed. We are of the opinion that in financial matters, we may refrain from passing any interim order. Of course, in WP No. 3079 of 2019 an interim order was passed restraining the respondent-bank from confirming sale or creating third party interest which was only for a period of three (3) weeks but it was never existed. We are of the opinion that in financial matters, we may refrain from passing any interim order. We are of the opinion that if it is a dispute relating to finance one may not suffer any irreparable loss. It is settled law that for granting interim injunction, three ingredients are must. Amongst them establishing irreparable loss by a party claiming injunction/interim order is paramount. Recently, the Hon'ble Supreme Court in Authorized Officer, State Bank of Travancore and another v. Mathew K.C., (2018) 3 SCC 85 : 2018 (2) ALD 132 (SC), has observed as follows in Para No. 15: "15. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer's expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same." 16. Despite the fact that in the counter-affidavit a specific stand was taken by the respondent-bank that the bank was not proceeding against the petitioner's property and in Para No. 13 it has stated that the bank had no such intention to auction the whole property which is in excess of 1924 Square yards, no reply to the counter-affidavit has been filed. However, at the time of hearing, learned Counsel for the petitioner tried to orally dispute the said stand. However, at the time of hearing, learned Counsel for the petitioner tried to orally dispute the said stand. Once on oath a specific stand has been taken by the bank that they are not proceeding against the petitioner's property, unless it is reverted the same shall be treated as admitted. Accordingly, in view of the aforesaid facts and circumstances, there is no reason for passing any order in favour of the petitioner. We are of the opinion that these writ petitions have got no merits. 17. Accordingly, both the writ petitions stand dismissed. 18. As a sequel, miscellaneous petitions pending, if any, in these writ petitions shall stand dismissed.