Kerala High Court
Easwar Prasad B.A vs Fine Fab Engineering And Constructions on 14 October, 2020
Author: Shaji P. Chaly
Bench: S.Manikumar, Shaji P.Chaly
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 14TH DAY OF OCTOBER 2020 / 22ND ASWINA, 1942
WA.No.1311 OF 2020
AGAINST THE ORDER IN WP(C) 19291/2020(J) OF HIGH COURT OF KERALA
APPELLANT/ADDL. RESPONDENT NO.9:
EASWAR PRASAD B.A.
S/O LATE E. ANANTHANARAYAN, AGED 57 YEARS,
RESIDING AT NANDHA VIHAR, REPUBLIC ROAD,
NORTH PARAVOOR, ERNAKULAM DISTRICT-683 513.
BY ADVS.
SRI.N.K.SUBRAMANIAN
SRI.ABRAHAM MATHAN
RESPONDENTS/PETITIONER & RESPONDENTS 1-8,ADDL. RESPONDENTS 10-13:
1 FINE FAB ENGINEERING AND CONSTRUCTIONS,
MUDOKUZHY BUILDING, NEAR HOC JUNCTION,
AMBALAMUGHAL, ERNAKULAM DISTRICT-682 032,
REPRESENTED BY ITS PARTNER, NOUSHAD KVM.
2 STATE OF KERALA,
REPRESENTED BY THE SECRETARY TO GOVERNMENT,
REVENUE DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001.
3 THE DISTRICT COLLECTOR,
COLLECTORATE,
KAKKANAD, ERNAKULAM-682 030.
4 THE DEPUTY COLLECTOR,
(REVENUE RECOVERY), COLLECTORATE,
KAKKANAD, ERNAKULAM-682 030.
W.A.No.1311/2020 & batch :2:
5 THE TAHSILDAR,
TALUK OFFICE, PARAVUR,
ERNAKULAM-683 513.
6 EDAYAR ZINC LIMITED,
REGISTERED OFFICE - 37/2,
CHINAR PARK, RAJHAT MAIN ROAD,
P.O, HATIARA, KOLKATA-700 157,
REPRESENTED BY ITS DIRECTOR.
7 PUNJAB NATIONAL BANK,
BO ILACO HOUSE, SIR PM ROAD,
FORT MUMBAI-400 001, NOW OPERATING
OUT OF 181A, 18TH FLOOR, E WING,
MAKER, CUFFE PARADE, MUMBAI-400 005,
REPRESENTED BY ITS MANAGER,
[email protected]
8 VILLAGE OFFICER,
VILLAGE OFFICE, KADUNGALOOR,
PARAVOOR TALUK-683 110.
9 THE KERALA STATE ELECTRICITY BOARD LIMITED,
VYDYUTHI BHAVANAM, PATTOM,
TRIVANDRUM - 695 004,
REPRESENTED BY ITS SECRETARY.
10 COMINCO BINANI ZINC EMPLOYEES UNION,
BINANIPURAM.PO, ALUVA-683 502,
REPRESENTED BY RAGESH KUMAR,
S/O N.K. RAMACHANDRAN, AGED 48 ,
RESIDING AT VIJAYA NIVAS,
BINANIPURAM, ALUVA,
ERNAKULAM DISTRICT-683 502.
11 COMINCO BINANI ZINC EMPLOYEES ASSOCIATION,
BINANIPURAM P.O, ALUVA-683 502,
REPRESENTED BY UNNIKRISHNAN K.V,
S/O K VELAYUDHAN PILLAI, AGED 56,
SANTHI NIKETHAN, KESARI ROAD,
NORTH PARAVOOR-683 513.
12 COMINCO BINANI ZINC EMPLOYEES ORGANISATION,
BINANIPURAM P.O, ALUVA-683 502,
REP. BY P.P. JOY, S/O P.O PAPPACHAN,
AGED 55, PUTHUSSERY HOUSE,
OLANAD NORTH, VARAPUZHA P.O,
ERNAKULAM DISTRICT, PIN-683 517.
W.A.No.1311/2020 & batch :3:
13 M/S SUPREME AIR PRODUCTS,
6/597, INDUSTRIAL DEVELOPMENT/ AREA,
BINANIPURAM P.O, EDAYAR, ALUVA-683 502,
RIBIN KURIEN, MANAGING DIRECTOR.
R6 BY ADV. SRI.SANTHOSH MATHEW
R6 BY ADV. SRI.ARUN THOMAS
R6 BY ADV. SRI.JENNIS STEPHEN
R6 BY ADV. SRI.VIJAY V. PAUL
SRI.V.ABRAHAM MARKOS FOR R1
SRI.RANJITH THAMPAN, ADDL.AG FOR R2-R5 & R8
SRI.C.AJITH KUMAR FOR R7
SRI N.SATHEESH FOR R9
SRI.P.B.KRISHNAN FOR R13
SRI.BINOY VASUDEVAN FOR R13
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
08.10.2020 ALONG WITH WA.1314/2020, THE COURT ON
14.10.2020 DELIVERED THE FOLLOWING:
W.A.No.1311/2020 & batch :4:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 14TH DAY OF OCTOBER 2020/22ND ASWINA, 1942
WA.No.1314 OF 2020
AGAINST THE ORDER IN WP(C) 19291/2020(J) OF HIGH COURT OF
KERALA
APPELLANT/SUPPLEMENTAL 13TH RESPONDENT:
SUPREME AIR PRODUCTS
6/597, INDUSTRIAL DEVELOPMENT AREA,
BINANIPURAM P.O., EDAYAR,
ALUVA-683 502, REPRESENTED BY ITS
MANAGING PARTNER, ROBIN KURIAN.
BY ADVS.SRI.P.B.KRISHNAN
SRI.BINOY VASUDEVAN
SRI.SREEJITH SREENATH
RESPONDENTS/PETITIONER & RESPONDENTS 1 TO 12:
1 FINE FAB ENGINEERING AND CONSTRUCTIONS
MUDUKUZHY BUILDING, NEAR HOC JUNCTION,
AMBALAMUGHAL, ERNAKULAM DISTRICT - 682 302.
2 STATE OF KERALA,
REPRESENTED BY THE SECRETARY TO GOVERNMENT,
REVENUE DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM - 695 001.
3 THE DISTRICT COLLECTOR,
COLLECTORATE, KAKKANAD,
ERNAKULAM - 682 030.
4 THE DEPUTY COLLECTOR,
(REVENUE RECOVERY)
COLLECTORATE, KAKKANAD, ERNAKULAM - 682 030.
W.A.No.1311/2020 & batch :5:
5 THE TAHSILDAR,
TALUK OFFICE, PARAVUR,
ERNAKULAM - 683 513.
6 EDAYAR SINC LIMITED,
REGISTERED OFFICE - 37/2,
CHINAR PARK, RAJAHAT MAIN ROAD,
P.O.HATIARA, KOLKATA - 700 157,
REPRESENTED BY ITS DIRECTOR.
7 PUNJAB NATIONAL BANK,
BO ILACO HOUSE, SIR PM ROAD,
FORT MUMBAI - 400 001,
NOW OPERATING OUT OF 161A,
18TH FLOOR, E WING, MAKER,
CUFFE PARADE, MUMBAI - 400 005
REPRESENTED BY ITS MANAGER.
8 VILLAGE OFFICER,
VILLAGE OFFICE, KADUNGALOOR,
PARAVUR TALUK - 683 110.
9 THE KERALA STATE ELECTRICITY BOARD LTD,
VYDYUTHI BHAVANAM, PATTOM,
THIRUVANANTHAPURAM - 695 004,
REPRESENTED BY ITS SECRETARY.
10 EASWAR PRASAD B.A,
AGED 57 YEARS
S/O. LATE E. ANANTHANARAYAN,
RESIDING AT NANDHA VIHAR, REPUBLIC ROAD,
NORTH PARAVOOR, ERAKULAM DISTRICT-683 513.
11 COMINCO BINANI ZINC EMPLOYEES UNION,
BINANIPURAM, P.O. ALUVA, PIN-683 502,
REPRESENTED BY ITS SECRETARY RAGESH KUMAR,
S/O. N.K. RAMACHANDRAN, AGED 48 YEARS,
RESIDING AT VIJAYA NIVAS, BINANIPURAM,
ALUVA, ERNAKULAM DISTRICT, PIN-683 502.
12 COMINCO BINANI ZINC EMPLOYEES ASOCIATION,
BINANIPURAM P.O., ALUVA-683 502,
REPRESENTED BY ITS SECRETARY
UNNIKRISHNAN K.V., S/O. K. VELAYUDHAN
PILLAI, AGED 56 YEARS, SANTHINIKETHAN,
KESARI ROAD, NORTH PARAVOOR, ERNAKULAM
DISTRICT, PIN-683 513.
W.A.No.1311/2020 & batch :6:
13 COMINCO BINANI ZINC EMPLOYEES ORGANIZATION,
BINANIPURAM P.O., ALUVA-683 502, REPRESENTED BY
ITS SECRETARY, P.P. JOY, S/O. PAPACHAN, AGED 55
YEARS, PUTHUSSERY HOUSE, OLANAD NORTH,
VARAPUZHA P.O., ERNAKULAM DISTRICT-683 517.
R6 BY ADV. SRI.SANTHOSH MATHEW
R6 BY ADV. SRI.ARUN THOMAS
R6 BY ADV. SRI.JENNIS STEPHEN
R6 BY ADV. SRI.VIJAY V. PAUL
ADV.SRI.V.ABRAHAM MARKOS FOR R1
SRI.RANJITH THAMPAN, ADDL.AG FOR R2-R5 & R8
ADV.SRI.C.AJITH KUMAR FOR R7
ADV.SRI N.SATHEESH FOR R9
ADV.SRI.N.K.SUBRAMAIAN FOR R10
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
08.10.2020, ALONG WITH WA.1311/2020, THE COURT ON
14.10.2020 DELIVERED THE FOLLOWING:
W.A.No.1311/2020 & batch :7:
JUDGMENT
[W.A.No.1311 of 2020 & W.A.No.1314 of 2020] Dated this the 14th day of October, 2020 Shaji P. Chaly, J.
The captioned writ appeals are filed by additional respondent Nos.9 and 13 in W.P.(C) No.19291 of 2020, challenging the interim order passed in the writ petition on 01.10.2020, whereby the following directions were issued:
"i. The petitioner is permitted to remove from the premises of the 5th respondent, the goods covered by Ext.P5 sale certificate, as also the two cranes that were brought into the said premises by the petitioner, under the supervision of M/s.Mtech Services LLP, Mumbai, who were appointed by the 6th respondent to monitor the sale and removal of plant and machinery by the petitioner.
ii. The 2nd respondent District Collector, as also the Revenue authorities under him, shall facilitate the removal of the goods covered by Ext.P5 sale certificate, by rendering the petitioner all assistance, including police protection if required, so as to enable the petitioner to take the aforesaid goods out of the premises of the 5th respondent. iii. It is made clear that the removal of the goods covered by Ext.P5 sale certificate, pursuant to the above permission, shall be on the clear understanding that the State Government continues to hold a charge over the goods covered by Ext.P5 sale certificate and can look to the said goods for realisation of its dues, notwithstanding its removal by the petitioner. In fact, pending final disposal of the writ petition, the State Government can look to the 5 th W.A.No.1311/2020 & batch :8: respondent, 6th respondent and the petitioner for a realisation of the tax amounts due to it from the 5th respondent. It is further made clear that, if the 5 th respondent offers alternate security, in lieu of the property sold to the petitioner, to the State Government as security for the amount covered by the first charge created in favour of the State Government, then it will be open to the State Government to consider the said offer of the 5th respondent. iv. The inter se claims between the impleaded respondents and the 5th respondent will be considered at the time of disposal of the Writ Petition.
v. For the sake of clarity, it might also be pointed out that, while the interim directions issued above would normally have sufficed to dispose the writ petition itself, the issue raised by Sri.Ranjith Thampan, the learned Additional Advocate General, as regards the continuation of the charge over the property, even in the hands of the petitioner/auction purchaser of the property, is one that requires to be examined in detail at the time of final hearing of the writ petition. The learned counsel for the petitioner also wanted to advance arguments on this aspect to contend that the statutory charge created in favour of the State Government would not adhere to and run with the property subsequent to the same in his favour. It is therefore that the above directions have been issued through an interim order, pending disposal of the writ petition."
It is thus challenging the legality and correctness of the directions so issued, these writ appeals are preferred.
2. The subject matter of consideration in the writ petition filed by the auction purchaser is on the basis of a proceeding initiated under the W.A.No.1311/2020 & batch :9: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, in which the appellants have got themselves impleaded and raised various claims in respect of the property that was sold by the secured creditor Bank ie., the Punjab National Bank, Fort, Mumbai to the writ petitioner. The claim raised by the appellant/9th respondent, a former employee of the debtor company is in regard to his employment benefits and other alleged dues, whereas the claim of the other appellant is on the basis of an agreement executed by the said appellant with the debtor company for purchase of the scrap materials.
3. The contentions put forth by the writ petitioner is that the Punjab National Bank, acting as a secured creditor, has taken physical possession inter alia of the plant and machinery and other movable assets of the 5th respondent in the writ petition ie Edayar Zinc Limited, a company incorporated under the Companies Act, 1956, (hereinafter called 'debtor company') under the provisions of the SARFAESI Act, 2002, evident from Ext.P1 notice given by the Advocate Commissioner. According to the writ petitioner, the company as well as the Bank along with other consortium Banks entered into a one time settlement whereby plant and machinery (secured asset) of the company were permitted to be sold as scrap subject to utilisation of the realised proceeds towards payments of dues due to the Bank and other consortium Banks.
4. The debtor company approached the Debt Recovery Tribunal, W.A.No.1311/2020 & batch : 10 : Mumbai by filing I.A.No.78 of 2020 in S.A. No.13 of 2016 and sought for various reliefs including a relief that the Tribunal may permit the sale of assets mentioned at Ext.A either by the respondents/secured creditor or by the applicant with the permission of the respondents under the provisions of the SARFAESI Act, 2002 and the respondents be directed to issue a certificate of sale thereof. The debtor company also sought for permission for appropriation of the sale proceeds on the said secured assets on a first priority basis in terms of Section 26E of the SARFAESI Act and the notification dated 24.12.2019 issued in respect thereof by the Ministry of Finance, (Department of Financial Services), whereby the debts of the respondents are to be paid on a priority to all other debts, all revenues, taxes, cesses and other rates payable by the Central Government/State Government/local authority.
5. The Debt Recovery Tribunal passed an order permitting the Punjab National Bank - the secured creditor to proceed with the sale of the movable property and appropriate sale proceeds as per Section 26E of the SARFAESI Act, 2002. The said order passed by the Debt Recovery Tribunal is produced as Ext.P3 in the writ petition, from where it is clear that the Punjab National Bank was permitted to proceed with the sale of the property as detailed in paragraph 2 of the application submitted for the purpose. It was also ordered that appropriation of sale proceeds has to be and is subject to Section 26E of the SARFAESI Act, 2002.
6. The Punjab National Bank, in terms of the OTS sanction, W.A.No.1311/2020 & batch : 11 : appointed M/s. M-Tech Services LLP, Mumbai as the monitoring agency to monitor the activities pertaining to the sale and removal of plant and machinery. The company informed the writ petitioner that permission has been granted for the sale of plant and machinery as scrap subject to utilisation of the realised proceeds towards payment of dues to respondent No.6/secured creditor, and other consortium Banks on account of a one time settlement entered into with the Punjab National Bank.
7. It is undisputed that on 18.3.2020, an amount of Rs.4,26,00,000/- (which includes GST) was paid by the writ petitioner to the Punjab National Bank for the purchase of certain movable property belonging to the debtor company secured in favour of the Punjab National Bank, Punjab & Sind Bank Limited and Oriental Bank of Commerce, Oriental Bank of Commerce has since merged with the Punjab National Bank. The Punjab National Bank issued Ext.P5 certificate of sale as per Rule 7(2) of the Security Interest (Enforcement) Rules, 2002 for the sale of certain portions of the dismantled plant and machinery available with the Edayar Zinc Limited. The certificate of sale clearly specifies the materials that can be removed. In fact, the certificate of sale was issued in exercise of Section 13(12) of the SARFAESI Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 after following the prescribed procedure, which is not under dispute at all.
W.A.No.1311/2020 & batch : 12 :
8. The case projected by the writ petitioner is that revenue recovery proceedings have been initiated under the Kerala Revenue Recovery Act against the Edayar Zinc Limited/debtor company in respect of tax dues, and dues to the Kerala State Electricity Board Limited - 8 th respondent, and notices regarding the same has been affixed on the gate to the premises of the debtor company.
9. Matters being so, the writ petitioner submitted a representation to the District Collector, Ernakulam, respondent No.2 herein, with copies to the Deputy Collector (Revenue Recovery), Collectorate, Ernakulam, the Tahsildar, Taluk Office, Paravur and the debtor company - respondents 3 to 5, seeking permission to remove materials from the premises of debtor company, situated within the limits of Paravur Taluk, Ernakulam District on the basis of Ext.P5 certificate of sale, evident from Ext.P6 dated 13.8.2020. However, the District Collector, through the Deputy Collector (RR), Collectorate, Ernakulam has issued Ext.P7 letter dated 24.8.2020 declining permission to the petitioner to remove the materials described in Ext.P5 certificate of sale, assigning the reason that the revenue recovery proceedings are pending. Anyhow, the Deputy Collector (RR) thereafter sealed the premises of debtor company on 2.9.2020 and threatened to initiate action against the petitioner for criminal trespass. The Village Officer, Kadungalloor issued a letter to the debtor company under directions of the District Collector with a copy to the writ petitioner stating that the company is illegally removing materials from its premises W.A.No.1311/2020 & batch : 13 : and that no vehicle should be moved out of the premises without permission from the District Collector respondent No.2 on account of pending revenue recovery proceedings evident from Exts.P8 and P9. It is also the case of the writ petitioner that immediately after effecting payment under Ext.P5 sale certificate, the writ petitioner had moved in certain equipment with the permission of the monitoring agency for the purpose of dismantling and removing the equipment and plant and machinery covered by the sale certificate. But, according to the writ petitioner, due to the pandemic Covid-19, everything came to a standstill.
10. It is, thus, aggrieved by Exts.P7 and P8 action taken by the revenue authorities, and seeking Police protection for removal of the sale proceeds, the writ petition was filed basing the submissions on Ext.P5 sale certificate issued by the Punjab National Bank. The appellant/9th respondent, has filed the appeal contending that after finding that the Government continues to have a charge over the property that was the subject matter of the sale in favour of the petitioner under Ext.P5 sale certificate, the learned single Judge ought not to have permitted the petitioner to take delivery of the goods covered by Ext.P5 sale certificate. It is also pointed out that the learned single Judge ought to have examined the schedule attached to the sale certificate by which the 6th respondent Bank took possession of the limited item of movable properties and none of the movable properties scheduled in Ext.P5 except a couple of items namely Jerofix plant and W.A.No.1311/2020 & batch : 14 : Zinc plant were taken possession by the Punjab National Bank. It is also submitted that, even when the petition for impleadment came up before the Bench for consideration, time was sought for filing the counter affidavit, the same was refused by the learned single Judge. It is also submitted that the learned single Judge travelled beyond the scope of consideration while directing the District Collector to render assistance, including police protection so as to enable the petitioner to take the goods out of the premises of the 5th respondent.
11. The paramount contention of the additional respondent No.9 is that he was an erstwhile employee of Edayar Zinc Limited/debtor company and substantial amount exceeding Rs.25,00,000/- is due to him and in fact a suit filed by the appellant is pending consideration before the competent civil court. It is also submitted that if the property sold as per Ext.P5 sale certificate is taken away, there is nothing remaining in the writ petition to consider and secure the claims raised by the appellant. Other legal contentions are also raised relying upon Sections 13(2), 13(4) and 26E of the SARFAESI Act, 2002.
12. So far as the appellant in W.A. No. 1314 of 2020 is concerned, the claim raised is that a proposal was submitted by the appellant on 29.1.2018 to Edayar Zinc Limited/debtor company to purchase the property referred therein for an amount of Rs.88.50 Crores, including GST. The company sent a reply seeking clarifications from the appellant and accordingly on 7.2.2018, the appellant has forwarded a clarification W.A.No.1311/2020 & batch : 15 : as sought for by the company. It is further submitted that the company gave a reply dated 8.2.2018 accepting the clarification given by the appellant and informing that the LoI submitted by the appellant (Annexure A along with the appeal) will be part of the OTS proposal to be submitted to the secured creditor by them. Thereafter, on 15.2.2018, the company submitted the proposal of OTS along with the LoI before the secured creditor. The paramount contention advanced by the appellant is that in continuation of the deliberation so made, Annexure F agreement was executed by and between the appellant and the company, in which it was stipulated that the consideration to be paid by the buyer is Rs.90 Crores. According to the appellant, an amount of Rs.85 lakhs was paid as advance to the debtor company and it was agreed that an amount of Rs.88,50,00,000/- has to be paid to the consortium bankers as per the OTS proposal given by the seller and the balance amount of Rs.65,00,000/- has to be paid to the seller after the buyer completes the dismantling of the scheduled properties.
13. According to the appellant, an amount of Rs.38,00,00,000/- was paid by the debtor company towards one time settlement to the secured creditor. It is further stated that nothing was heard thereafter about the OTS proposal submitted. According to the appellant, the debtor company & secured creditor, colluded together and preferred an application before the Debt Recovery Tribunal, Mumbai seeking permission to sell the secured assets. Various other contentions are W.A.No.1311/2020 & batch : 16 : raised. The appellant is not having any case that the secured creditor Bank was in any manner involved with the memorandum of agreement executed by and between the appellant and the company. Relying upon the Annexure E communication dated 15.2.2018 addressed to the secured creditor Bank and other consortium banks, which is admitted by the counsel appearing for the Bank to be received, by the debtor company proposing a one time settlement scheme and requesting to consider the same. Therefore, the sum and substance of the contention advanced by the said appellant is that there was absolutely nothing on record to indicate the necessity of passing an interim order by the learned single judge. It is also submitted that the learned single Judge has not taken note of Ext.P5 sale certificate, which is the outcome of a fraud by and between the secured creditor Bank and the writ petitioner. Other contentions are also raised.
14. We have heard Adv.N.K.Subramanian and Adv.P.B.Krishnan appeared for the appellants, Sri.Joseph Kodianthara appeared for the 1 st respondent/writ petitioner, learned Additional Advocate General Sri.Ranjith Thampan appeared for the State and the Officials, Sri.Santhosh Mathew for the respondent Company and Sri.C.Ajith Kumar, learned standing counsel appearing for the secured creditor Bank and perused the materials and documents on record.
15. The sole question arises for consideration is whether any interference is required to the interim order passed by the learned single W.A.No.1311/2020 & batch : 17 : Judge. It is quite clear and evident that the interim order was passed after taking into account the counter affidavits filed by the debtor company, the secured creditor Bank as well as the State. In fact, the basic issue raised by the State Government is in respect of the priority over a charge created through a State legislation vis-a-vis the provisions of Section 26E of the SARFAESI Act, 2002. Anyhow, those aspects are to be considered by the learned single Judge when the writ petition is considered finally. Even though the appellants herein have not filed counter affidavits, the appellants were permitted to advance arguments on the basis of the respective claims made in the impleading petitions. Anyhow, it was specifically noted by the learned single Judge that under the SARFAESI Act, 2002, unlike under the State Revenue Recovery Act, a sale in favour of an auction purchaser is not made free from all encumbrances, which would suggest that the statutory charge created in favour of the State Government continues to adhere to and run with the property notwithstanding the said sale and transfer of possession to the petitioner auction purchaser. It was accordingly that suitable arrangements and measures were made to protect the revenue interest of the State Government while permitting the petitioner to take delivery of the goods covered by Ext.P5 sale certificate. A reading of the directions extracted above would make it clear that sufficient safety precautions are made by the learned single Judge in order to consider the claims raised by all concerned. According to the appellant, in W.A. W.A.No.1311/2020 & batch : 18 : No.1311 of 2020, substantial amounts are due to him from the company. Anyhow, those are all matters to be considered by the learned single Judge while finally hearing the writ petition. In fact, the property was sold after making publication on various dates starting from 7.3.2018 and upto 19.7.2019. Ext.P5 sale certificate shows that the subject property was only movable articles which were sold for a consideration of Rs.4,26,00,000/-, including GST. It is clear from the records produced along with the writ appeals that the company is having more than 100 acres of immovable property which is undisputedly worth several crores. According to us, what was weighed with the learned single Judge while passing the interim order was the sale certificate issued by the secured creditor bank specifying that the sale price of Rs.4,26,00,000/- was received by the secured creditor from the writ petitioner on sale and that too after securing orders from the competent Tribunal, and it was accordingly that the movable articles enlisted in the schedule was sold to the writ petitioner. It is also evident that the financial liability of the debtor company is Rs.175 crores.
16. We have evaluated the factual and legal situations and rival submissions made across the Bar. It is an admitted fact that necessary proceedings were initiated by the secured creditor in terms of the SARFAESI Act, 2002. It is an admitted fact that the appellants have not raised any claim/objections in contemplation of the provisions of Section 13 of Act 2002 before the Debt Recovery Tribunal or the secured creditor W.A.No.1311/2020 & batch : 19 : Bank, invoking the rights conferred on them under Section 17 of Act 2002. Therefore, one thing is clear that the appellants have not taken any action in accordance with statutory provisions contained under the SARFAESI Act, 2002. On a reading of the provisions of Section 17 of Act 2002, it is clear that any person aggrieved by any sale/proceedings would have taken appropriate action in contemplation of the provisions of law before the Debt Recovery Tribunal which is the competent legal forum to consider the clams of any such bona fide claimant. It is also clear and evident that, as per Rules, 2002, it is the right and prerogative of the secured creditor to sell the properties either in lump or in part and at its choice, and therefore prima facie we are of the opinion that third persons have no right or authority to interfere with the proceedings initiated by the secured creditor, in accordance with law normally and ordinarily. We are also of the considered opinion that a minuscule of the movable property alone is sold as per Ext.P5 sale certificate and the company is having more than 100 acres of immovable property, larger plant and machinery and other movable articles admittedly. If any bona fide claims of the appellants are to be entertained by the writ court, still the company may be having sufficient assets so as to discharge the liabilities. So also, from the suit filed by appellant in W.A. No. 1314 of 2020, it is clear that the said appellant has sought for passing a decree of mandatory injunction directing the defendants therein ie., the debtor company and the Punjab National Bank/secured creditor to forthwith W.A.No.1311/2020 & batch : 20 : allow the appellant to access the place where industrial waste material 'Jerofix' is stored and not to obstruct the appellant company to take away the plaint schedule industrial waste material specified above, lying at the premises owned by the debtor company in terms of the final sale order dated 12.10.2017 issued by the debtor company confirming the sale of the above industrial base material to the plaintiff and further to pass a decree against the debtor company and the secured creditor Bank to give credit and set off an amount of Rs.9,25,719/- expended in the process of obtaining permission from Central Pollution Control Board and Kerala State Pollution Control Board with interest @ 18% from the date of the suit till realisation against the amount payable as per the final order dated 12.10.2017. Anyhow, it is unequivocal that no claims are raised by the said appellant on the basis of the memorandum of understanding/ agreement dated 29.6.2018 entered into by and between the said appellant and the debtor company. We have already pointed out that even assuming that there is an agreement executed by and between the debtor company and the appellant, that can never be said to be binding on the Bank as such, to proceed with any one time settlement scheme offered by the debtor company. Anyhow, we do not think that consequent to the interim order passed by the learned single Judge, the appellants are prejudiced or affected since, even according to the appellants, debtor company is having sufficient assets both movable and immovable, to wipe off the liabilities of secured creditors as well as W.A.No.1311/2020 & batch : 21 : others, which are all matters to be considered and adjudicated by the learned single Judge finally in the writ petition.
17. On going through the impugned interim order passed by the learned single Judge, we are of the considered opinion that since Ext.P5 sale certificate is issued in contemplation of the provisions of the SARFAESI Act, 2002, the purchaser of the sale proceeds is entitled to remove the sale proceeds from the premises in question. In fact, it is clearly stated in the direction No.iv extracted above that inter se claims between the intervenor respondents and the 5th respondent will be considered at the time of disposal of the writ petition.
Taking into account the materials on record and the legal and factual circumstances, we are of the considered opinion that the appellants have not made out any case of legal infirmity in the exercise of the discretionary jurisdiction by the learned single Judge in passing an interim order read with Rule 150 of the Kerala High Court Rules, in an appeal filed under Section 5 of the Kerala High Court Act.
Needless to say writ appeals fail and are accordingly dismissed. Pending interlocutory applications, if any, shall stand closed.
Sd/-
S.Manikumar, Chief Justice Sd/-
Shaji P.Chaly Judge vpv W.A.No.1311/2020 & batch : 22 : APPENDIX OF WA 1314/2020 PETITIONER'S EXHIBITS:
ANNEXURE A TRUE COPY OF THE PROPOSAL SUBMITTED BY
THE APPELLANT DATED 29.1.2018 TO THE 6TH
RESPONDENT.
ANNEXURE B TRUE COPY OF THE LETTER SENT BY THE 6TH
RESPONDENT TO THE APPELLANT.
ANNEXURE C TRUE COPY OF THE REPLY DATED 7.2.2018
SUBMITTED BY THE APPELLANT.
ANNEXURE D TRUE COPY OF THE LETTER SENT BY THE 6TH
RESPONDENT TO THE APPELLANT.
ANNEXURE E TRUE COPY OF THE OTS PROPOSAL DATED
15.2.2018 SUBMITTED BY THE 6TH RESPONDENT
TO THE 7TH RESPONDENT.
ANNEXURE F TRUE COPY OF THE AGREEMENT DATED
29.6.2018 EXECUTED BETWEEN THE APPELLANT
AND THE 6TH RESPONDENT.
ANNEXURE G TRUE COPY OF THE E-AUCTION NOTICE ISSUED
BY THE 7TH RESPONDENT.
/true copy/
P.A. to Judge