Madras High Court
Mr.Ashok Rose vs The Indian Overseas Bank Zonal Office on 2 August, 2023
Author: S.S.Sundar
Bench: S.S.Sundar, D.Bharatha Chakravarthy
W.P.(MD) No.8227 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 02.08.2023
CORAM:
THE HONOURABLE MR.JUSTICE S.S.SUNDAR
and
THE HONOURABLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.(MD) No.8227 of 2023
and
W.M.P.(MD)No.7584 and 7586 of 2023
Mr.Ashok Rose ... Petitioner
-vs-
1.The Indian Overseas Bank Zonal Office,
Through its Zonal Manager,
11/952, Crosscut Road,
Gandhipuram, Coimbatore-12.
2.The Indian Overseas Bank,
Regional Office Madurai,
Through its Regional Manager,
Plot No.40, 80 feet Road,
Anna Nagar, Madurai.
3.The Chief Manager,
Indian Overseas Bank,
Dindigul Main Road,
R.S.Road, Dindigul.
4.The Authorised Officer,
Indian Overseas Bank,
Regional Office,
Nagercoil, Kanyakumari District.
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https://www.mhc.tn.gov.in/judis
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W.P.(MD) No.8227 of 2023
5.The Chief Judicial Magistrate,
Kanyakumari District,
Nagercoil.
6.Rajaiah Christopher ... Respondents
PRAYER: Petition filed under Article 226 of the Constitution of India, to
issue a writ of certiorarified mandamus, to call for the proceedings of the
5th respondent dated 29.03.2023 in Criminal Miscellaneous Petition No.
3408 of 2023 in Chief Judicial Magistrate, Nagercoil and quash the
same as arbitrary, illegal and without jurisdiction and consequently
forbear the respondents from initiating any action under the
Securitization Act, 2002 without the restructuring/revival proceedings
before the Committee constituted under the “Framework for Revival and
Rehabilitation of Micro, Small and Medium Enterprises” (MSME's) of the
Reserve Bank of India, dated 17.03.2016 attaining finality and for other
suitable orders.
For Petitioner : Mr.V.Raghavachari
for Mr.S.Ramesh
For Respondents : No Appearance for R1, R2 & R4
Mrs.Anantha Gomathi for R3
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https://www.mhc.tn.gov.in/judis
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W.P.(MD) No.8227 of 2023
ORDER
[Order of the Court was made by D.BHARATHA CHAKRAVARTHY, J.] This Writ Petition is filed challenging the order of the learned Chief Judicial Magistrate, Nagercoil, dated 29.03.2023 in Cr.M.P.No.3408 of 2023, passed under Section 14 of the SARFAESI Act, 2002.
2. The petitioner, Mr.Ashok Rose, is a Director of the Company by name Gherkins Agro Exports (Indiana) Private Limited. The company availed credit facilities from the respondent Bank from the year 2004 onwards. In the year 2015, the respondent Bank sanctioned facilities to the tune of Rs.21.65 crores and thereafter, the loan account became irregular and was classified as NPA on 30.09.2016. The Bank initiated proceedings under the SARFAESI Act and issued a demand notice on 20.01.2017 and thereafter, took symbolic possession of the property on 13.03.2019. Thereafter, the property was brought for auction on 26.02.2021 in which, one Rajaiah Christopher purchased the property. Upon the confirmation of sale, a sale certificate was also executed and was duly registered as Document No.2554 of 2021. ____________ https://www.mhc.tn.gov.in/judis Page 3 of 11 W.P.(MD) No.8227 of 2023
3. In the meanwhile, the petitioner had filed W.P.(MD)No.10062 of 2019. It is the claim of the company that it is covered under the scheme framed by the Reserve Bank of India for Micro, Small and Medium Enterprises (MSME's), dated 17.03.2016 which is known as 'Framework For Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSME's). Therefore, the Bank ought to have placed the proposal of the petitioner before the appropriate committee constituted for the said purpose. Considering the said claim of the petitioner, the learned Single Judge disposed of the above writ petition, by order dated 12.08.2022 on the following terms:
“...3.It is beyond dispute that when a request of this nature is placed before the bank, it has to be considered by a properly constituted committee. In this case, such a committee does not appear to have taken a decision. Therefore, on this ground, the impugned proceedings of the third respondent are quashed. The matter is remitted to the file of the second respondent. The second respondent shall form an appropriate committee as per the existing guidelines. Thereafter, a decision will be taken on the petitioner's request on merits and in accordance with law within a period of twelve weeks from the date of receipt of copy of this order. This writ petition is allowed. No costs. Connected miscellaneous petitions are closed.” ____________ https://www.mhc.tn.gov.in/judis Page 4 of 11 W.P.(MD) No.8227 of 2023
4. While so after selling the property, the respondent Bank filed an application in Crl.M.P.Sr.No.569 of 2022 and even before numbering the said application, the petitioner herein presented objections before the learned Chief Judicial Magistrate that when this Court had passed an order on the above terms in W.P.(MD)No.10062 of 2019, the Bank cannot proceed further to file application under Section 14 of SARFAESI Act. On the said objection of the petitioner, the application was returned by the learned Chief Judicial Magistrate by an order dated 21.09.2022. The respondent Bank challenged the said order vide W.P.(MD)No.24132 of 2022 and by order dated 16.11.2022, the said order of the learned Chief Judicial Magistrate was set aside and the application of the respondent Bank was ordered to be entertained and decided on mertis and in accordance with law. The borrower company also filed S.L.P. (Civil) No.4043 of 2023, which was also dismissed as withdrawn with liberty to approach the High Court in respect of some factual inaccuracies in the said order.
5. Thus in accordance with the directions issued by this Court in W.P.(MD)No.24132 of 2022, the learned Chief Judicial Magistrate, ____________ https://www.mhc.tn.gov.in/judis Page 5 of 11 W.P.(MD) No.8227 of 2023 entertained the application under Section 14 of the SARFAESI Act in Crl.M.P.No.3408 of 2023 and by an order dated 29.03.2023 allowed the same and appointed an Advocate Commissioner for securing the physical possession of the property. Aggrieved by the same, the petitioner herein as a Director of the company has filed this writ petition. It is the prayer of the petitioner that unless the restructuring/revival proceedings before the committee constituted under the 'Framework For Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSME's)' of Reserve Bank of India, dated 17.03.2016 attains finality, the respondent Bank cannot proceed further with any action and therefore, the order of the learned Chief Judicial Magistrate is liable to be quashed. However, we are unable to agree with the submissions made on behalf of the petitioner for the following reasons:
(i) Firstly, the main ground of attack that the proceedings are pending before the committee constituted under the 'Framework For Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSME's)' of Reserve Bank of India itself is no longer correct since on the behalf of ____________ https://www.mhc.tn.gov.in/judis Page 6 of 11 W.P.(MD) No.8227 of 2023 the respondent Bank, a communication dated 26.05.2023 addressed to the Chairman of the company is produced whereunder the proceedings were closed. Therefore, the claim of the petitioner that the proceedings are pending before the committee can no longer be made;
(ii) The reason for closure of the proceedings is also mentioned in the communication that the company never submitted any restructuring proposal. It can be seen that the petitioner made only a representation, dated 11.01.2019 thereby explaining their plight as to why their account became irregular, but, however, absolutely no proposal as to in what manner they want to restructure is absent. On behalf of the respondent Bank, the proceedings of the committee is also produced before us whereunder the Chairman of the company had attended two meetings before the committee on 15.11.2022 and 30.12.2022 wherein twice time was granted for submitting a proposal for restructuring which was never done by the company. Therefore, the entire exercise was nothing but an abuse of process of law aimed only to protract ____________ https://www.mhc.tn.gov.in/judis Page 7 of 11 W.P.(MD) No.8227 of 2023 proceedings and put spokes into the lawful process of recovery of the balance outstanding due to the respondent Bank;
(iii) When the property in question has been sold and the sale is complete and when the petitioner has lost the right of redemption in toto, the auction purchaser is naturally entitled for the physical possession of the property and the respondent Bank is duty bound to secure physical possession by filing an application under Section 14 of the Act and duly entrust the possession to the purchaser. There is no ground whatsoever which is left to the petitioner to challenge the order;
(iv) This Writ Petition is also liable to be dismissed for suppressio veri and suggestio falsi. The writ petition is filed on 10.04.2023. But, however, the entire filing of S.L.P.(Civil).No. 4043 of 2023 and dismissal thereof which is a material fact, is totally suppressed. This apart when the very claim of the petitioner is in respect of the revival and rehabilitation ____________ https://www.mhc.tn.gov.in/judis Page 8 of 11 W.P.(MD) No.8227 of 2023 scheme, the facts that two meetings were held by the committee on 15.11.2022 and 30.11.2022 and in the said two meetings, the Chairman of the company had participated and further the company failed to submit any proposal for rehabilitation are all very material facts which has been wilfully and wantonly suppressed in the writ petition.
6. In the result,
(i) The Writ Petition is dismissed;
(ii) The interim stay which was granted in W.M.P.(MD)No.7584 of 2023 shall stand vacated and the same is also dismissed;
(iii) Since the writ petition is dismissed on our findings of abuse of process of law and suppressing of material facts, the petitioner shall pay a cost of Rs.1,00,000/- (Rupees One Lakh only) payable by the petitioner within a period of four weeks from the date of receipt of a copy of this order to the ____________ https://www.mhc.tn.gov.in/judis Page 9 of 11 W.P.(MD) No.8227 of 2023 credit of Account No.7567821433, Indian Bank, High Court Branch, Madurai in the name of Registrar Judicial, Madurai Bench of Madras High Court, Madurai, for donating law books to a Separate Section in the name of “Madurai Bench of Madras High Court” in Kalaignar Centenary Library, Madurai.
(iv) Consequently, connected W.M.P.(MD)No.7586 of 2023 is dismissed.
Post the matter 'for reporting compliance' on 30.08.2023.
[S.S.S.R., J.] [D.B.C., J.]
02.08.2023
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
sji
To:
The Chief Judicial Magistrate,
Kanyakumari District,
Nagercoil.
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https://www.mhc.tn.gov.in/judis
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W.P.(MD) No.8227 of 2023
S.S.SUNDAR, J.
and
D.BHARATHA CHAKRAVARTHY, J.
sji
W.P.(MD) No.8227 of 2023
and
W.M.P.(MD)No.7584 and 7586 of 2023
02.08.2023
____________
https://www.mhc.tn.gov.in/judis
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