Karnataka High Court
M/S Koromandal Refractories vs The General Manager on 30 August, 2023
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NC: 2023:KHC-D:9736
WP No. 101326 of 2022
C/W WP No. 100627 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 30TH DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 101326 OF 2022 (GM-RES)
C/W
WRIT PETITION NO. 100627 OF 2023
IN WP.NO. 101326/2022
BETWEEN:
1. M/S. KOROMANDAL REFRACTORIES PVT. LTD.,
PLOT NO. 19 AND 20, PHASE NO.1,
KIADB INDUSTRIAL ESTATE, TARIHAL,
HUBBALLI-580 026,
REPRESENTED BY IT'S DIRECTOR,
KARAN S/O. CHANDRAKANT SHAH,
AGE: 40 YEARS, OCC: BUSINESS,
R/O: H.NO.35, JITURI LAYOUT,
APPROVA NAGAR, NEAR MANJUNATH
NAGAR CROSS, GOKUL ROAD, HUBBALLI,
TQ: HUBBALLI, DIST: DHARWAD-580030.
2. M/S. YASH ENERGY PVT. LTD.,
PLOT NO. 19 AND 20, PHASE NO.1,
KIADB INDUSTRIAL ESTATE, TARIHAL,
HUBBALLI-580 026,
REPRESENTED BY IT'S PARTNER,
Digitally
signed by
YASHAVANT
KARAN S/O. CHANDRAKANT SHAH,
YASHAVANT NARAYANKAR
NARAYANKAR Date: AGE: 40 YEARS, OCC: BUSINESS,
2023.09.12
14:23:45
+0530 R/O: H.NO.35, JITURI LAYOUT,
APPROVA NAGAR, NEAR MANJUNATH
NAGAR CROSS, GOKUL ROAD, HUBBALLI,
TQ: HUBBALLI, DIST: DHARWAD-580030.
...PETITIONERS
(BY SRI. SHIVAPRASAD SHANTANGOUDAR, ADV. FOR
SRI. H.N. GULARADDI, ADVOCATE)
AND:
1. THE GENERAL MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE, HUBBALLI DHARWAD BRTS ROAD,
RAYAPUR, DHARWAD, TQ AND DIST: DHARWAD-580009.
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NC: 2023:KHC-D:9736
WP No. 101326 of 2022
C/W WP No. 100627 of 2023
2. THE DEPUTY MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE, HUBBALLI DHARWAD BRTS ROAD,
RAYAPUR, DHARWAD, TQ AND DIST: DHARWAD-580009.
3. THE ASSISTANT GENERAL MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE, HUBBALLI DHARWAD BRTS ROAD,
RAYAPUR, DHARWAD, TQ AND DIST: DHARWAD-580009.
4. THE AUTHORISED OFFICER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE, HUBBALLI DHARWAD BRTS ROAD,
RAYAPUR, DHARWAD, TQ AND DIST: DHARWAD-580009.
...RESPONDENTS
(BY SRI. ANOOP G. DESHPANDE, ADV. FOR R1 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN
NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT AND
QUASH THE IMPUGNED ORDER DARED 19.03.2022 IN
REF.KSFC/BO/DWR/1400/2021-22 PASSED BY THE RESPONDENT
NO.3 PRODUCED AT ANNEXURE-T AND ALSO QUASH THE PAPER
PUBLICATION DATED 19.03.2022 PUBLISHED IN DECCAN HERALD
PRODUCED ALONG WITH THIS WRIT PETITION AT ANNEXURE-T1. IN
THE INTEREST OF JUSTICE AND EQUITY.
IN WP.NO. 100627/2023
BETWEEN:
1. M/S. KOROMANDAL REFRACTORIES PRIVATE LIMITED,
HAVING ITS OFFICE AT PLOT NO. 25, PHASE NO. 1,
KIADB INDUSTRIAL ESTATE, TARIHAL, HUBBALLI-580026,
REPRESENTED BY ITS DIRECTOR,
MR. KARAN S/O. SRI. CHANDRAKANT SHAH,
AGE: 41 YEARS, RESIDING AT H.NO.27,
MATHRU KRUPA, NEAR RENUKANAGAR LAST BUS STOP,
KUMARA PARK ROAD, HUBBALLI-580030.
2. M/S. YASH ENERGY,
HAVING ITS OFFICE AT PLOT NO. 25, PHASE NO. 1,
KIADB INDUSTRIAL ESTATE, TARIHAL, HUBBALLI-580026,
REPRESENTED BY ITS PARTNER,
MR. KARAN S/O. SRI. CHANDRAKANT SHAH,
AGE: 41 YEARS, RESIDING AT H.NO.27,
MATHRU KRUPA, NEAR RENUKANAGAR LAST BUS STOP,
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NC: 2023:KHC-D:9736
WP No. 101326 of 2022
C/W WP No. 100627 of 2023
KUMARA PARK ROAD, HUBBALLI-580030.
...PETITIONERS
(BY SRI. SHIVAPRASAD SHANTANGOUDAR, ADV. FOR
SRI. H.N. GULARADDI, ADVOCATE)
AND:
1. THE MANAGING DIRECTOR,
KARNATAKA STATE FINANCE CORPORATION,
'KSFC BHAVAN', NO.1/1, THIMMAIAH ROAD,
NEAR CANTONMENT RAILWAY STATION,
BENGALURU-560052.
2. THE GENERAL MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE AT HUBBALLI DHARWAD BRTS ROAD,
RAYAPURA, DHARWAD-580009.
3. THE DEPUTY GENERAL MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE AT HUBBALLI DHARWAD BRTS ROAD,
RAYAPURA, DHARWAD-580009.
4. THE ASSISTANT GENERAL MANAGER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE AT HUBBALLI DHARWAD BRTS ROAD,
RAYAPURA, DHARWAD-580009.
5. THE AUTHORIZED OFFICER,
KARNATAKA STATE FINANCE CORPORATION LTD.,
BRANCH OFFICE AT HUBBALLI DHARWAD BRTS ROAD,
RAYAPURA, DHARWAD-580009.
...RESPONDENTS
(BY SRI. ANOOP G. DESHPANDE, ADV. FOR R1 TO R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO, I) ISSUE A WRIT OF
CERTIORARI OR SUCH OTHER WRIT OR DIRECTION QUASHING THE
ORDER DATED 20.08.2022 BEARING NO.KSFC/BO/DWR/518/2022-
23 PASSED BY 4TH RESPONDENT PRODUCED AND MARKED AS
ANNEXURE-AA. II) ISSUE A WRIT OF MANDAMUS OR SUCH OTHER
WRIT OR DIRECTION DIRECTING THE RESPONDENT TO CONSIDER
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NC: 2023:KHC-D:9736
WP No. 101326 of 2022
C/W WP No. 100627 of 2023
THE ONETIME SETTLEMENT PROPOSAL GIVEN BY THE PETITIONERS
DATED 13/04/2022 AS PER ANNEXURE-Z2, IN THE INTEREST OF
JUSTICE AND EQUITY.
THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
These two writ petitions are filed by the default borrowers assailing the impugned order passed by the respondents in rejecting the one time settlement (for short 'OTS') proposal submitted by the petitioners. Consequently, a mandamus is sought to issue direction to the respondents to consider the OTS proposal given by the petitioners.
2. The respondents/corporation sanctioned term of loan of Rs.6,56,00,000/- to the petitioners/company and an additional term of loan of Rs.2 crore was also sanctioned subsequently on 04.06.2015. Since, petitioners/company committed defaults, respondents/corporation was compelled to initiate recovery proceedings. Feeling aggrieved by the action initiated by respondents/corporation, the -5- NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 petitioners/company knocked the doors of this Court in W.P.No.101326/2022, which is listed along with W.P.No.100627/2023.
3. It is borne out from the records that this Court in W.P.No.101326/2022 was pleased to grant interim order subject to petitioner's depositing Rs.2 crores. Since petitioners/company failed to deposit the said amount within the stipulated time, this Court declined to extend the interim order. This compelled the petitioners/company to prefer an appeal before Division Bench of this Court in Writ Appeal No.100173/2022. The Division Bench has however permitted the petitioners to deposit a sum of Rs.2 crores in compliance of the interim order.
4. These two captioned writ petitions are filed on two counts. The W.P.No.101326/2022 is filed assailing the auction notice dated 19.03.2022 and W.P.No.100627/2023 is filed to quash the rejection of OTS proposal vide Annexure-AA and consequently to direct the -6- NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 respondents/corporation to consider the proposal dated 13.04.2022.
5. On examining the records, this Court would find that the representation as per Annexure-Z2 seeking OTS proposal is dealt by respondents/corporation and OTS is rejected, which is evident from the impugned order vide Annexure-AA. The petitioner's grievance before this Court is that respondents/corporation having rejected the OTS proposal and having issued fresh demand for sum of Rs.24,59,96,311/-, however, while issuing an auction notice have fixed the reserved price of the property under sale for Rs.17,35,00,000/-. It is in this background, petitioners by way of mandamus at the hands of this Court is requesting to issue necessary directions to permit petitioners to purchase the property at reserved price fixed in the auction notice.
6. The grievance of the petitioners/company in W.P.No.100627/2023 is that if the respondents/corporation is willing to sell the property by -7- NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 way of auction at reserved price fixed at Rs.17,35,00,000/-, their claim under impugned notice vide Annexure-AA, insisting for a sum of Rs.24,59,96,311/- is unreasonable. The grievance of petitioners/company is that conduct of respondents/corporation is totally unjust and therefore, counsel on record has persuaded this Court to issue necessary direction to respondents/corporation to consider petitioner's offer as indicated in the auction sale.
7. Per contra, learned counsel appearing for respondents/corporation repelling the arguments advanced by learned counsel for petitioners would however vehemently argue and contend that the petitioners/company cannot by way of right dictate at what price the property has to be sold in discharge/recovery of the amount due to the respondents/corporation. Since petitioners/company is defaulter, they have no right to bargain and step into the shoes of prospective buyer under auction proceedings. He would point out that insofar as petitioners/company is -8- NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 concerned, respondent/corporation cannot sell the property at lesser price than what is indicated in demand notice. Therefore, he would request this Court that since petitioners/company has no legal right, no relief can be granted.
8. I have examined the records, having heard learned counsel for the petitioners, I have given my anxious consideration to the material on record.
9. Pursuant to directions issued by this Court, petitioners/company had an opportunity to avail OTS. The said opportunity is availed by the petitioners/company and the negotiations and deliberations during the course of OTS scheme are not found to be productive and the offer made by petitioners/company is out rightly rejected by respondents/corporation. If the OTS proposal offered by petitioners/company is rejected, I am of the view that petitioners/company has no legal right to insist for 2nd round time of OTS. If OTS proposal that was offered to borrower is availed and the same is rejected, the borrower -9- NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 who is found to be defaulter is not entitled to seek 2nd time OTS. Such a scheme is not provided under the banking Rules and Regulations.
10. Insofar as claim of petitioner's that if respondents/corporation is willing to sell the property, which was mortgaged pursuant to loan availed at a reserved price of Rs.17,35,00,000/-, they are entitled to purchase the property at the reserved price fixed cannot be acceded to. Fresh demand notice post rejection of OTS scheme is indicated in Annexure-AA. The reserved price indicated in auction sale is tentative price and these prices are indicated by the Recovering Institution with a tentative speculation that they would be able to fetch better price during auction. Therefore, borrower cannot insist to purchase the property as per auction price indicated in the auction sale notice. If demand notice is issued for a sum of Rs.24,59,96,311/- as on 20.08.2022, petitioners/company cannot by way of right insist the respondents/corporation to sell at reserved price indicated in auction sale notice. In
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NC: 2023:KHC-D:9736 WP No. 101326 of 2022 C/W WP No. 100627 of 2023 absence of any legal right, no mandamus can be issued. This Court is of the view that respondents/corporation having rejected OTS offer, is also not legally bound to consider 2nd proposal. Therefore, no mandamus lies.
11. For the reasons stated supra, writ petitions being devoid of merits are dismissed.
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JUDGE AM List No.: 1 Sl No.: 2