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2023 DIGILAW 1450 (AP)

Shaik Masthan Vali v. Union of India

2023-11-09

A.V.SESHA SAI, SUMATHI JAGADAM

body2023
JUDGMENT A.V.SESHA SAI, J. - Heard Sri S.M.Subhani, learned Senior Counsel representing Sri G.Suryam and Sri Sreedhar Valiveti, learned Standing Counsel for Respondent No.2 to 4, apart from perusing the material available on record. 2. For realization of the debt amount from one M/s.V.R.Enterprises, the respondents-bank authorities initiated proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(for short The Act") and conducted public auction for the subject land, pursuant to the Intended Sale Notice, dtd. 27/8/2010, issued under Rules 6(2) and 8(6) of the Security Interest(Enforcement) Rules, 2002 framed under the Act. The auction for the subject property was conducted on 8/10/2010, in which the petitioner herein emerged as highest bidder and a sale certificate was also issued by the respondents-bank authorities on 11/11/2010 after the payment of the entire bid amount of Rs.5, 41, 200.00 by the petitioner. 3. According to the learned counsel for the petitioner, only an extent of 75 square yards is available out of the total extent of 240 square yards on ground and the rest of the extent is covered by a road and the respondents-bank authorities did not disclose the said reality in their auction notice. In elaboration, it is further contended by the learned counsel for the petitioner that the respondents-bank authorities also obtained a valuation certificate from their approved valuer prior to auction of the subject property and, according to the said valuation certificate, the available site is only 75 square yards and the rest of the extent of 165.00 square yards is covered by a road. According to the learned Senior Counsel, the said information was not mentioned in the auction Sale Notice issued by the respondents-bank authorities. 4. The information available before this Court discloses that after correspondence with the respondentsbank authorities, eventually, a legal notice came to be issued by the Petitioner in the month of November, 2018 and, thereafter, Writ Petition No.8232 of 2019 was filed before this Court. In the said Writ Petition, initially, on 2/7/2019, an interim order was granted by a Coordinate Bench of this Court, directing Respondent Nos.2 to 4 therein to consider the petitioner"s representations, dtd. 21/7/2023 and 13/3/2018, and also the legal notice dtd. 31/10/2018, and take appropriate decision and communicate the same. Eventually, the said Writ Petition came to be disposed of vide order, dtd. 19/11/2019. 21/7/2023 and 13/3/2018, and also the legal notice dtd. 31/10/2018, and take appropriate decision and communicate the same. Eventually, the said Writ Petition came to be disposed of vide order, dtd. 19/11/2019. Paragraphs Nos.3 and 4 of the said order read as follows:- 3. In order to put a quietus for the entire issue, this Court deems it appropriate to dispose of the Writ Petition, leaving it open for the petitioner herein to submit appropriate representation/application to the respondents' bank within a period of 10 days from the date of receipt of a copy of this order, enclosing all the relevant information and if any such representation/application is made within the time stipulated above, the same be considered and appropriate orders be passed within a period of three(3) weeks, thereafter as per law. Accordingly, the Writ Petition is disposed of. 4. In the result, the writ petition is disposed of. There shall be no order as to costs. 5. Pursuant to the aforesaid order, the respondents-bank authorities, by way of impugned intimation, dtd. 19/12/2019, declined to consider the request of the petitioner. In the above background, the present Writ Petition came to be filed by the petitioner. 6. A counter affidavit has been filed by the respondents-bank, denying the allegations in the affidavit, filed in support of the Writ Petition, and in the direction of justifying the impugned action. 7. According to the learned counsel for the petitioner, the impugned action is highly illegal, arbitrary, unreasonable and violative of Articles 14 and 300-A of the Constitution of India, besides being opposed to the very spirit and object of the provisions of the Act. It is further submitted by the learned counsel that, despite the opinion rendered by their counsel vide letter, dtd. 18/10/2013, the respondent authorities erroneously and arbitrarily declined to consider the request of the Writ Petitioner. It is also the submission of the learned Senior Counsel that the bank authorities are required to be highly transparent in their actions and cannot resort to the impugned action. In support of his submissions, learned Senior Counsel, representing the learned Counsel for the petitioner on record, places reliance on the Judgment of the Hon'ble Apex Court in the case of Leelamma Mathew Vs Indian Overseas Bank and others., 2022 SCC Online SC 1601. 8. In support of his submissions, learned Senior Counsel, representing the learned Counsel for the petitioner on record, places reliance on the Judgment of the Hon'ble Apex Court in the case of Leelamma Mathew Vs Indian Overseas Bank and others., 2022 SCC Online SC 1601. 8. On the contrary, learned Counsel for the respondents-bank, Sri Sreedhar Valiveti, strongly resisting the Writ Petition, submits that the Writ Petitioner is expected to be highly vigilant before participating in the auction and, since the respondents-bank authorities conducted auction as per the provisions of the law, the impugned auction cannot be faulted by any stretch of imagination. It is further submitted by the learned Counsel that the balance of an extent of 165 square yards has been allotted in favour of the earlier owner at some other place by the Society and he is enjoying the subject property. 9. In the above background, now the issues that emerge for consideration of this Court in the present Writ Petition are:- 1) Whether the impugned action on the part of the respondents-bank authorities in refusing to consider the request of the Writ Petitioner is in accordance with law? 2) Whether the Writ Petitioner is entitled for any relief from this Court under Article 226 of the Constitution of India? 10. The Parliament, to regulate the Securitisation and Reconstruction of Financial Assests and Enforcement of Security Interest and for matters connected therewith or incidental thereto, brought in a legislation called "Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002". 11. The Central Government, in exercise of powers conferred by sub-Sec. (1) and Clause (b) of subSec. (2) of Sec. 38 read with sub-Sec. s (4), (10) and (12) of Sec. 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest(second) ordinance, 2002(Ord.3 of 2002), framed the Rules called "The Security Interest Enforcement Rules, 2002"(for short the Rules"). 12. The respondents-bank authorities sold the subject property. Sub-Rule(5) of Rule 8 of the Rules stipulates that, before effecting sale of the immovable property referred to in Sub-Rule(1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell whole or any part of such immovable secured asset by any of the methods stipulated therein. 13. 13. It is not in dispute that in the Sale Notice, description of the immovable property to be sold is to be scrupulously and specifically mentioned. It is needless to observe that the real and correct extent of the property which can be sold alone shall have to be mentioned. In the instant case, though the reality remains that the official valuer of the respondents-bank authorities specifically mentioned in his report, dtd. 12/7/2010, about the actual extent of the property and the property covered by the road, the auction Sale Notice issued by the respondents-bank authorities did not indicate the same. It is also significant to note that in the opinion expressed by the learned Standing Counsel for the respondents-bank authorities on 18/10/2013, obtained by the petitioner under the provisions of Right to Information Act, 2005, the learned Standing Counsel opined in the following manner. In the above circumstances, the Bank has the following alternatives:- 1. Since the site now available is only 75 sq.yards and the auction is conducted as is where is condition the bank may convince the auction purchaser to take delivery of the site on pro-reta price fixed for 240 square yards. 2. As per the terms and conditions of the Auction, the bank is at liberty to cancel the sale and refund the amount deposited by the auction purchaser. 14. It is the categorical case of the Writ Petitioner that only an extent of 75 square yards is available on ground, but the petitioner was compelled to pay the amount towards the entire extent of 240 square yards. The justification sought to be offered by the respondents-bank authorities, as advocated by the learned Standing Counsel for the respondents-bank that the borrower had been given the rest of the balance of 165 square yards and he is in possession of the property, in the facts and circumstances of the case, cannot be a valid justification and a ground for denying the legitimate claim of the Writ Petitioner. 15. In this context, it may be appropriate and relevant to refer to the Judgment cited by the learned Senior Counsel appearing for the petitioner in the case of Leelamma Mathew Vs. Indian Overseas Bank and others (referred to supra). Paragraph Nos.25 to 27 of the said Judgment read as follows. 25. 15. In this context, it may be appropriate and relevant to refer to the Judgment cited by the learned Senior Counsel appearing for the petitioner in the case of Leelamma Mathew Vs. Indian Overseas Bank and others (referred to supra). Paragraph Nos.25 to 27 of the said Judgment read as follows. 25. Now so far as the submission on behalf of the plaintiff and the finding recorded by the High Court that the suit was barred by Sec. 34 of the SARFAESI Act is concerned, at the outset it is required to be noted that the suit was for damages/compensation, with respect to the balance land, which could not have been decided by the DRT or Appellate Tribunal, Sec. 34 of the SARFAESI Act shall be applicable only in a case where the Debt Recovery Tribunal and/or Appellate Tribunal is empowered to decide the matter under the SARFAESI Act. The plaintiff was not challenging the sale/sale certificate. The plaintiff claimed the damages/compensation with respect to the less area. Therefore, the High Court has seriously erred in holding that the suit was barred by Sec. 34 of the SARFAESI Act. 26. Now so far as the submission on behalf of the Bank that as the property was put to auction on "as is where is" and "as is what is" basis and the plaintiff was aware that the actual area of the property auction is less and thereafter entered into the transaction and therefore the plaintiff cannot claim/pray compensation/damages with respect to the deficiency in thearea is concerned, at the outset, it is required to be noted that right from the very beginning the plaintiff insisted for handing over the possession of the 54 cents. When the property was put to auction even the Bank was not in actual possession. The Bank got possession pursuant to the order passed by the District Magistrate and thereafter the measurement was done by Tehsildar in which it was found that the actual area of the land auctioned was 34.60 cents and 14.40 cents was already transferred by the debtor much earlier. Therefore, at the relevant time when the property was put to auction even the Bank was not aware of the actual measurement and had gone by the document and 54 cents was put to auction. Therefore, at the relevant time when the property was put to auction even the Bank was not aware of the actual measurement and had gone by the document and 54 cents was put to auction. Considering the fact that the auction notice was for 54 cents; the plaintiff submitted the offer of Rs.32, 05, 000.00 for 54 cents; the plaintiff paid the actual amount of sale consideration i.e. Rs.32, 05, 000.00 for 54 cents; the sale certificate was issued for 54 cents and even the sale certificate which was registered in the year 2012 was for 54 cents, thereafter it was not open for the Bank to contend that though the Bank had handed over the possession of 34.60 cents still the sale consideration recovered would be for 54 cents. It was not open for the financial institution like the Bank to take such a plea. Even otherwise it is required to be noted that at least in the month of November, 2007 when the Tehsildar submitted the report, the Bank was aware that the actual area is 34.60 cents and not 54 cents. Thereafter the Bank ought not to have issued the sale certificate for 54 cents. The Bank ought to have been fair and ought to have issued the sale certificate only for 34.60 cents. This shows the conduct on the part of the bank. 27. Rule 8 of the 2002 Rules cast a duty on the authorized officer to take all precautions before putting the secured asset to sell. As per subrule 5 of Rule 8 before effecting sale of the immovable property (secured assets) the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor and fix the reserve price of the property and may sell the whole or any part of such immovable secured asset. Therefore, when the reserve price was fixed the same was for 54 cents. Therefore, it can be presumed that the Bank was aware that the actual area of the secured asset is less than 54 cents. As per Sec. 54 of the Transfer of Property Act the seller was bound to disclose any buyer any material defect in the property of which the buyer is not aware and which the buyer could not ordinarily discover. As per Sec. 54 of the Transfer of Property Act the seller was bound to disclose any buyer any material defect in the property of which the buyer is not aware and which the buyer could not ordinarily discover. Under the circumstances also the submission on behalf of the Bank that the property was put to auction on "as is where is" and "as is what is" condition, thereafter the plaintiff shall not be entitled to compensation of the less area cannot be accepted. 16. In view of the law laid down by the Hon'ble Apex Court in the above Judgment, this Court does not find any justification on the part of the respondents-bank authorities in declining to consider the request of the Writ Petitioner. 17. For the aforesaid reasons, the Writ Petition is allowed, with a direction to the respondents-bank authorities to refund the proportionate amount paid by the petitioner towards the entire extent of 240 square yards, by retaining the amount paid towards 75 square yards with interest @ 6 % per annum from the date of payment made by the petitioner. It is also made clear that it is open for the respondents-bank authorities to proceed against the person who is in occupation of the rest of the extent of 165 square yards as per law. This exercise with regard to the refund of the amount to the Writ Petitioner shall be completed within a period of two(2) months from the date of receipt of a copy of this order. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this case, shall stand closed.