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2020 DIGILAW 627 (TS)

Thirumala Enterprises v. State Bank Of Indian

2020-08-14

A.RAJASHEKER REDDY, K.LAKSHMAN

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JUDGMENT K. Lakshman, J. - This Writ Petition is filed to declare the e-auction notice dated 03.06.2020 published by the respondent - Bank, proposing to conduct sale on 10.07.2020, as illegal. 2. Heard Sri Rapolu Bhaskar, learned counsel for the petitioners and Sri Meher Prasad, learned counsel for the respondent bank. 3. It is contended by Sri Rapole Bhaskar, learned counsel for the petitioners that they have availed a loan of Rs.2.00 crores from the respondent bank by executing all the necessary loan documents and creating equitable mortgage by depositing original title deeds of the properties. Since there was default in payment of regular Equal Monthly Installments (EMI) within the stipulated time, the respondent bank has declared the account of the petitioners as non-performing account (NPA). The respondent bank vide its letter dated 16.08.2018 has informed the petitioners that the petitioners are eligible for One Time Settlement (OTS) scheme of an amount of Rs.2,77,95,629/- subject to the terms and conditions stipulated in the said OTS proposal. Accordingly, the petitioners have submitted a letter accepting the said OTS proposal and paying 5% of the OTS amount i.e. Rs.14,00,000/-. The same was accepted by the respondent bank vide its letter dated 29.09.2018. As per the terms and conditions of the said accepted OTS scheme, the petitioners have to pay 20% of the OTS amount i.e. Rs.55,59,126/- within thirty (30) days i.e. 29.10.2018 and the balance can be paid within six months from the date of the letter. The petitioners have paid an amount of Rs.69,59,216/-, out of OTS amount of Rs.2,77,95,627/-. 4. It is further contended by the petitioners that since the petitioners failed to pay the OTS amount within the stipulated time mentioned, the respondent bank cancelled the said OTS vide its letter dated 03.04.2019. The respondent bank has also filed O.A. No.2793 of 2017 before the Debts Recovery Tribunal - I (DRT-I), Hyderabad, and the same was allowed. A recovery certificate was issued in favour of the respondent bank on 12.09.2018 by the DRT. 5. It is further contended by the petitioners that the respondent bank has issued sale notice dated 01.11.2019 by fixing the date of auction as 07.12.2019 without following the procedure laid down under Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002, (for short 'the SERFAESI Rules'). 5. It is further contended by the petitioners that the respondent bank has issued sale notice dated 01.11.2019 by fixing the date of auction as 07.12.2019 without following the procedure laid down under Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002, (for short 'the SERFAESI Rules'). Therefore, the petitioners have filed an application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SERFAESI Act') vide SA No.320 of 2019 before the DRT-I, Hyderabad challenging the sale notice dated 01.11.2019. The petitioners have also filed I.A. No.3297 of 2019 to stay all further proceedings including dispossession of the petitioners or their tenants from the scheduled properties pursuant to the e-auction sale notice dated 01.11.2019. The DRT-I, Hyderabad vide order dated 11.12.2019 directed the respondent bank to maintain status quo pursuant to the auction conducted on 07.12.2019 in respect of the scheduled properties subject to the petitioners depositing a sum of Rs.75,00,000/- in three equal installments; 1st installment of Rs.25,00,000/- is directed to be deposited within one week from the date of the order, second installment of Rs.25,00,000/- within one week thereafter and the third installment of Rs.25,00,000/- within three weeks thereafter in no lien account with the respondent bank. It is also made clear by the DRT-I, Hyderabad in the order dated 11.12.2019 that if the petitioners fail to comply with any of the above conditions, the status quo shall stand vacated and the bank is at liberty to proceed further in accordance with law. 6. It is further contended by the petitioners that the petitioners have sent letters dated 11.02.2020 and 27.02.2020 to the respondent bank seeking time to pay the balance OTS amount and also enclosed Demand Drafts (4 in number) for an amount of Rs.2.00 crores. They have also expressed their willingness to clear the OTS amount. Without considering the same, the respondent bank has published eauction sale notice dated 03.06.2020 proposing to conduct the sale on 10.07.2020. According to the petitioners, they have already paid major portion of the loan amount and the respondent bank has cancelled the OTS proposal illegally. They have also expressed their willingness to clear the OTS amount. Without considering the same, the respondent bank has published eauction sale notice dated 03.06.2020 proposing to conduct the sale on 10.07.2020. According to the petitioners, they have already paid major portion of the loan amount and the respondent bank has cancelled the OTS proposal illegally. It is further contended by the petitioners that the respondent bank without considering the payments made by the 1st petitioner and without following the procedure laid down under law and without encashing the demand drafts for an amount of Rs.1.00 crore, high handedly proceeded for recovery of the loan. The 1st petitioner is also taking steps to avail private loans from third parties in order to clear the entire debt. Thus, the e-auction sale notice dated 03.06.2020 proposing to conduct the auction on 10.07.2020 issued by the respondent bank is illegal. Therefore, the present writ petition. The petitioners have filed copies of the correspondence between the petitioners and the respondent bank with regard to OTS and also copies of four demand drafts. 7. The respondent bank filed its counter denying the allegations made by the petitioners. 8. Sri N. Meher Prasad, learned counsel for the respondent bank would submit that the petitioners did not comply with the order dated 11.12.2019 passed by the DRT-I, Hyderabad in I.A No.3297 of 2019 by depositing the amount. They failed to pay the OTS amount within the stipulated time and therefore, the bank has cancelled the said OTS scheme vide its letter dated 03.04.2019. The petitioners did not question the same. The petitioners never came forward to clear the loan amount and they did not handover the DDs as alleged by them. He would further submit that the DRT-I, Hyderabad, has issued recovery certificate in favour of the bank in OA. No.2793 of 2017. There is no challenge to the said order by the petitioners. 9. The petitioners vide their letter dated 11.02.2020 informed the respondent bank that they are trying to close the liability before 31.03.2020 and requested time to pay the balance amount as per the old OTS proposal. No.2793 of 2017. There is no challenge to the said order by the petitioners. 9. The petitioners vide their letter dated 11.02.2020 informed the respondent bank that they are trying to close the liability before 31.03.2020 and requested time to pay the balance amount as per the old OTS proposal. The respondent bank, vide its reply dated 04.03.2020, informed the petitioners that the OTS scheme-2018 is non-discretionary in terms of amount and time etc., and the same was already closed in 2018 itself and therefore, the bank is not in a position to accept the request of the petitioners. 10. Thereafter, the bank has issued e-auction sale notice dated 03.06.2020 fixing the auction on 10.07.2020. The same was published in two leading newspapers and affixed on the properties. There is no irregularity or illegality committed by the bank in issuing the e-auction sale notice. 11. Learned counsel for the respondent bank would submit that the petitioners did not raise any ground much less legal ground alleging the violation of any procedure laid down under the SERFAESI Act and SERFAESI Rules by the respondent bank in issuing e-auction sale notice dated 03.06.2020. 12. He would further submit that the petitioners did not comply with the order dated 02.07.2020 passed by this Court in the writ petition by depositing Rs.2.00 crores before the date of auction. Therefore, the respondent bank is constrained to conduct e-auction on 10.07.2020 and confirmed the sale in favour of the highest bidder in respect of two properties. He has filed copies of the sale confirmations. With the said contentions, learned counsel for the respondent bank sought to dismiss the present writ petition. 13. It is relevant to note that the writ petition came up for hearing on 02.07.2020, learned counsel for the petitioners submitted that the account of the petitioners was settled under OTS scheme, the petitioners were granted time till 31.03.2020. When the petitioners wanted to deposit an amount of Rs.2.00 crores on 22.01.2020, the respondent bank refused to receive the same on the ground that some more amount is due. He has further submitted that earlier an amount of Rs.69,59,216/- was paid to the respondent bank but, the said amount was not adjusted and without considering the said aspects, the respondent bank has issued the impugned auction notice. He has further submitted that earlier an amount of Rs.69,59,216/- was paid to the respondent bank but, the said amount was not adjusted and without considering the said aspects, the respondent bank has issued the impugned auction notice. He has further submitted that the petitioners will deposit Rs.2.00 crores before the auction date i.e. before 10.07.2020. 14. Recording the said submission, this Court vide order dated 02.07.2020, granted stay of auction scheduled on 10.07.2020 on condition of petitioners depositing Rs.2.00 crores before the auction date which will be subject to further orders in the writ petition. 15. The respondent filed counter on 29.07.2020 stating that the petitioners did not comply with the said order. It is also specifically contended by the respondent bank in the counter that the petitioners have not complied with the orders passed by the DRT-I, Hyderabad in I.A No.3297 of 2019 in SA No.320 of 2019. The petitioners did not file any reply rebutting or denying the said contentions. They have not filed any reply saying that they have complied with the order passed by the DRT-I, Hyderabad on 11.02.2019 and this Court dated 02.07.2020. Thus, the contentions of the petitioners that the bank refused to receive an amount of Rs.2.00 crores etc., are not believable. 16. It is also not in dispute that the respondent bank vide its letter dated 03.04.2019 has cancelled the OTS scheme on the ground that the petitioners failed to pay the OTS amount within the stipulated time and as per the terms and conditions of the OTS scheme. The petitioners did not challenge the same and the said letter attained finality. The petitioners did not challenge the order passed by the DRT in O.A. No.2793 of 2017. Thereafter, the bank has issued sale notice dated 01.11.2019 fixing the date of auction on 07.12.2019. The petitioners challenged the said sale notice by way of filing an application under Section 17 of the SERFAESI Act vide SA No.320 of 2019. The said SA is pending. The petitioners did not comply with the conditional order dated 11.12.2019 passed by the DRT in I.A. No.3297 of 2019 in SA No.320 of 2019. Therefore, the bank has issued the present e-auction sale notice dated 03.06.2020 proposing to conduct the auction on 10.07.2020. The petitioners filed the present writ petition challenging the said notice. 17. The petitioners did not comply with the conditional order dated 11.12.2019 passed by the DRT in I.A. No.3297 of 2019 in SA No.320 of 2019. Therefore, the bank has issued the present e-auction sale notice dated 03.06.2020 proposing to conduct the auction on 10.07.2020. The petitioners filed the present writ petition challenging the said notice. 17. On perusal of the writ affidavit, the petitioners did not raise any legal contention stating that the respondent bank has violated the procedure laid down under the SERFAESI Act or SERFAESI Rules while issuing e-auction notice dated 03.06.2020. Though the petitioners filed copies of DDs (4 in number) dated 22.01.2020 for Rs.50,00,000/- each, they have not paid the said amount of Rs.2.00 crores to the respondent bank. As stated above, this Court has granted interim order subject to deposit of Rs.2.00 crores on the submission made by the petitioners. But, the petitioners did not pay any amount and did not comply with the order dated 02.07.2020. Therefore, the respondent bank has conducted auction on 10.07.2020 and confirmed the sale in favour of the successful bidder in respect of two properties. The respondent bank has filed the sale confirmation letters dated 13.07.2020 in respect of two properties. The bank has also filed sale certificate dated 27.07.2020 and 27.07.2020 in respect of the above said two properties. 18. The petitioners also failed to establish that the respondent bank has violated the procedure laid down under SERFAESI Act and SERFAESI Rules while issuing e-auction notice dated 03.06.2020 and also in conducting auction on 10.07.2020. The only contention of the petitioners in the writ petition is that the respondent bank has not accepted the OTS amount, and expressed their willingness to clear the loan amount as per the old OTS scheme. It is pertinent to mention that the respondent bank has cancelled the OTS approval vide its letter dated 03.04.2019. Thereafter, on the request of the petitioners vide their letter dated 23.09.2019, accepted the OTS proposal vide its letter dated 30.09.2019 on the terms and conditions specifically mentioned therein. The petitioners did not pay any amount except addressing two letters dated 11.02.2020 and 27.02.2020 stating that they are trying to close the account by 31.03.2020. They have not paid any amount despite the respondent bank giving ample opportunity. Thus, the petitioners failed to prove their bonafidies. The petitioners did not pay any amount except addressing two letters dated 11.02.2020 and 27.02.2020 stating that they are trying to close the account by 31.03.2020. They have not paid any amount despite the respondent bank giving ample opportunity. Thus, the petitioners failed to prove their bonafidies. The petitioners failed to establish any ground or reason to interfere with the e-auction notice dated 03.06.2020 issued by the respondent bank and to entertain the writ petition. Admittedly, the bank has conducted the auction on 10.07.2020 and issued sale confirmation letters and also sale certificates in favour of the highest bidders in respect of the two properties. In view of the above facts and circumstances, we do not see any merit in the writ petition and the same is liable to dismissed. 19. Accordingly, the Writ Petition is dismissed. Miscellaneous petitions pending, if any, shall stand dismissed. There shall be no order as to costs.