Research › Search › Judgment

Andhra High Court · body

2025 DIGILAW 1204 (AP)

T. M. Food Processing Limited v. Union of India

2025-11-25

CHEEKATI MANAVENDRANATH ROY, TUHIN KUMAR GEDELA

body2025
ORDER : 1. This writ petition for Mandamus is filed to declare the action of the 2nd respondent in not refunding a sum of Rs.1 crore, deposited by the petitioner, in compliance with the order of Debts Recovery Tribunal in securitization application No.51 of 2016 and in writ petition No.4093 of 2019 on the file of this Court, despite disposal of the O.A.No.299 of 2012 filed by the 2nd respondent-Bank, as illegal, arbitrary and consequently sought direction to respondent-Bank to refund the said sum of Rs.1 crore to the petitioner. 2. Heard Mr. M.R.K.Chakravarthy, learned counsel for the petitioner and Mr. S.Satyanarayana Moorthy, learned Standing Counsel for respondent Nos.2 and 3-State Bank of India. None appeared for respondent No.1. 3. A company by name M/s. East India Surimi Company Private Limited isthe principal borrower, which availed loan from the 2nd respondent-State Bank of India. It has offered its immovable property as security for repayment of the loan amount. As the principal borrower committed default in repayment of the loan amount, the Bank has initiated the measures under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘SARFAESI Act’). In the said process, the Bank has brought the immovable property of the petitioner herein by name M/s. TM FoodProcessing Limited, which was acquired by the petitioner from the 4th respondent, in O.A.No.299 of 2012, for realization of the loan amount. On the ground that the petitioner is not the principal borrower or the guarantor and his property is not a secured asset and it cannot be sold in the auction for realization of the loan amount, the petitioner has approached the Debts Recovery Tribunal by way of filing S.A.No.51 of 2016, for redressal of his grievance. Along with the said application, he has filed an interlocutory application for stay of the measures initiated by the Bank. In the interlocutory application, while granting stay, the Debts Recovery Tribunal has directed the petitioner to deposit a sum of Rs.50 lakhs. Therefore, a conditional stay was granted on depositing a sum of Rs.50 lakhs. In compliance with the said direction, the petitioner has deposited Rs.50 lakhs to the account of the Bank. Accordingly, the stay was granted. Subsequently, the said S.A.No.51 of 2016 was dismissed for default. The property of the petitioner was put to sale. Therefore, a conditional stay was granted on depositing a sum of Rs.50 lakhs. In compliance with the said direction, the petitioner has deposited Rs.50 lakhs to the account of the Bank. Accordingly, the stay was granted. Subsequently, the said S.A.No.51 of 2016 was dismissed for default. The property of the petitioner was put to sale. So, the petitioner has approached this Court and filed a writ petition to stall the said proceedings of the sale. This Court has disposed of the said writ petition with a condition of further depositing of Rs.50 lakhs to the account of the Bank for restoration of the securitization application that was dismissed for default. So, in total the petitioner has deposited Rs.1 crore, pursuant to the direction given by the Debts Recovery Tribunal and pursuant to the direction given by this Court, to the account of the Bank. The securitization application that was dismissed for default was restored on to the file of the Debts Recovery Tribunal. After hearing both the parties, the S.A.No.51 of 2016 filed by the petitioner was allowed as per the order dated 26.09.2019. The said order became final as the same was not challenged by the Bank or the principal borrower or the guarantor. The O.A. that was preferred by the Bank before the Debts Recovery Tribunal, Visakhapatnam was also dismissed, as per the order dated 09.02.2024. In all the said proceedings i.e., in S.A.No.51 of 2016 and also in O.A.No.299 of 2012, it is found that the petitioner herein is not liable for repayment of the loan amount that is availed by the principal borrower. Therefore, it is evident that no liability is fastened to the petitioner regarding repayment of the said loan amount. So, its immovable property cannot be put to sale for realization of the loan amount availed by the principal borrower. As all the said proceedings both in the S.A. and the O.A. attained finality, the petitioner is legally entitled for refund of the said one crore rupees deposited by it, pursuant to the orders of the Debts Recovery Tribunal and also this Court. As the representation submitted by the petitioner to the Bank for refund of the said sum of Rs.1 crore is not being considered and the same is not being returned to him, the petitioner is constrained to approach this Court, seeking the aforesaid relief. 4. As the representation submitted by the petitioner to the Bank for refund of the said sum of Rs.1 crore is not being considered and the same is not being returned to him, the petitioner is constrained to approach this Court, seeking the aforesaid relief. 4. Learned Standing Counsel for respondent Nos.2 and 3, while opposing the writ petition, submits that in the S.A.No.51 of 2016, the Tribunal held that the petitioner has to file a counter claim for refund of the money deposited by it and as no such counter claim is filed, that the petitioner is not entitled for refund of the amount, as claimed in the writ petition. He further submits that even in the O.A. also it is held that the petitioner did not file any counter claim as ordered by the Debts Recovery Tribunal and thereby nothing is decided for refund of the money in the said O.A. also. So, on these two grounds, he opposes the prayer of the writ petitioner. He, then, submits that in the O.A., it is ordered that the amount deposited by the petitioner shall be adjusted to the loan account and as such, he is not entitled for refund of the said amount. 5. Answering the said contention, learned counsel for the petitioner would submit that it is not ordered in the O.A. to adjust the money deposited by the petitioner to the loan account of the principal borrower and submits that it is only ordered that the amount deposited by the principal borrower to be adjusted to the loan account of the bank. 6. We have meticulously considered the aforesaid rival submissions made by both the learned counsel for the petitioner and the learned Standing Counsel for the respondent Nos.2 and 3-Bank. Admittedly, the petitioner is notthe principal borrower, who availed loan from the 2nd respondent-Bank. The petitioner is also not the guarantor for the said loan amount. When the Bank sought to put its immovable property to sale for realization of the loan amount availed by the principal borrower in the proceedings that are initiated by the petitioner in S.A.No.51 of 2016, it is clearly adjudicated that the petitioner has no liability to repay the loan amount as he is not the borrower and the guarantor. When the Bank sought to put its immovable property to sale for realization of the loan amount availed by the principal borrower in the proceedings that are initiated by the petitioner in S.A.No.51 of 2016, it is clearly adjudicated that the petitioner has no liability to repay the loan amount as he is not the borrower and the guarantor. The Debts Recovery Tribunal also in its order, at para No.21, clearly held as follows: “Accordingly, I find that the D5 (the present petitioner) is not liable in the present O.A. claim filed by the applicant- Bank but the defendant No.5 in the S.A.No.51 of 2016, as per the directions of the Hon’ble High Court and the Tribunal, has paid some amounts but defendant No.5 is not liable to pay any amount.” 7. In the O.A. that was filed by the Bank also, it is found that the petitioner has no liability to repay the loan amount. Therefore, when he is not fastened with any liability to repay the loan amount, his money of Rs.50 lakhs that was deposited, pursuant to the direction given by the Debts Recovery Tribunal for the purpose of granting stay in his favour and a sum of Rs.50 lakhs deposited by him pursuant to the order of this Court for the purpose of restoration of the securitization application that was dismissed for default, cannot be withheld by the Bank. In the order of the O.A. also, it is clearly held that O.A. against the D5 (petitioner herein) is dismissed, in view of the finding recorded supra in the said order. Therefore, the petitioner is entitled for the refund of the said money deposited by him pursuant to the two orders passed by the Debts Recovery Tribunal and this Court, in the account of the Bank. 8. The two objections raised by learned Standing Counsel for the Bank, opposing the prayer in the writ petition is clearly devoid of any merit. Even though the Debts Recovery Tribunal has held in its order that a counter claim is to be made by the petitioner for refund of the amount, in our considered view, it is an erroneous finding. When the petitioner has no claim against anyone that is either the bank or the principal borrower or the guarantor, the question of making a counter claim for refund of his money does not arise at all. When the petitioner has no claim against anyone that is either the bank or the principal borrower or the guarantor, the question of making a counter claim for refund of his money does not arise at all. An erroneous finding given to that effect can be set-aside in the writ jurisdiction of this Court in exercise of its extraordinary jurisdiction under Article 226 of Constitution of India. Even the other ground raised by the learned Standing Counsel, that as an appeal is preferred by the principal borrower and as the Bank also now proposed to file an appeal that the amount deposited by the petitioner cannot be refunded, is also devoid of any merit. The said appeal filed by the principal borrower is between him and the Bank. The petitioner has nothing to do with same. Similarly, even if any appeal is preferred by the Bank, it is a matter between the Bank and the principal borrower to be adjudicated and the petitioner has nothing to do with the same. As already noticed, both the Tribunal and in the OA also, it is concurrently found that there is no liability on behalf of the petitioner regarding repayment of the said loan amount. So, the Bank cannot keep and withhold the huge sum of Rs.1 crore that is deposited by the petitioner pursuant to the orders of the Debts Recovery Tribunal and the order passed in O.A. It amounts to enriching the Bank at the expense of others, which is not permissible under law. The Apex Court also, inthe case of Union of India and others v. Dhanwanti Devi and others, (1996) 6 SCC 44 held as follows: “The concept of unjust enrichment by the State is alien to and in derogation of the constitutional scheme and public policy. The general principle is that one should not be permitted to unjustly enrich himself at the expense of others. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belongs to another.” 9. The same principle applies to the Bank also. It cannot seek to enrich itself at the expense of others. Therefore, in the facts and circumstances of the case, we are of the considered view that the petitioner is entitled for a direction to the bank to refund the said sum of Rs.1 crore forthwith. 10. The same principle applies to the Bank also. It cannot seek to enrich itself at the expense of others. Therefore, in the facts and circumstances of the case, we are of the considered view that the petitioner is entitled for a direction to the bank to refund the said sum of Rs.1 crore forthwith. 10. In fine, the Writ Petition is allowed, declaring the action of the respondent Nos.2 and 3-Bank in not refunding a sum of Rs.1 crore deposited by the petitioner in compliance with the orders of the Debts Recovery Tribunal and this Court in writ petition No.4093 of 2019 as a conditional order forpassing the orders in his favour, as illegal and arbitrary. The 2nd respondent-Bank is hereby directed to forthwith refund the said sum of Rs.1 crore to the petitioner within a period of one (1) month from date of this order. Failing which, it carries interest. The Bank is liable to pay interest @ 6% per annum on the said sum of Rs.1 crore, till the date of realization of the said money by the petitioner. The present order passed for refund of the money will be subject to the result of the appeal that is preferred by the principal borrower and as well as the proposed appeal to be preferred by the Bank. It is also made clear that uninfluenced by any of the observations made by this Court in this order, the appeal pending before the Debts Recovery Tribunal shall be adjudicated, in accordance with law. There shall be no order as to costs. As a sequel, Interlocutory Applications pending, if any, shall stand closed.