Kerala High Court
The Thrissur District Co-Operative ... vs Mustaffa T.A on 27 July, 2022
Author: S.Manikumar
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 27TH DAY OF JULY 2022 / 5TH SRAVANA, 1944
WP(C) NO. 39931 OF 2018
PETITIONER:
THE THRISSUR DISTRICT CO-OPERATIVE BANK LIMITED
THRISSUR, SAHAKARANA SATABDHI MANDIRAM,
KOVILAKATHUMPADAM, THRISSUR-680022, REPRESENTED BY ITS
GENERAL MANAGER.
BY ADVs.
SRI.P.C.SASIDHARAN, STANDING COUNSEL, THRISSUR DISTRICT
CO.OPERATIVE BANK LTD.
SMT.AKHILA.
RESPONDENTS:
1 MUSTAFFA T.A.
S/O.ALAVI, THAYAMKULAM HOUSE, KAIPARAMBU.P.O.,
THRISSUR-680546.
2 KADEEJA,
W/O.MUSTAFFA T A., THAYAMKULAM HOUSE, KAIPARAMBU.P.O.,
THRISSUR-680546.
3 SUHARATH,
W/O.ABBAS, AMBALATH HOUSE, KOCHERI.P.O., THRISSUR-
680501.
4 KERALA LOK AYUKTA,
REPRESENTED BY ITS REGISTRAR, LEGISLATURE COMPLEX,
VIKAS BAHVAN.P.O., THIRUVANANTHAPURAM-695003.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
27.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) NO.39931/2018 2
"C.R"
JUDGMENT
Dated this the 27th day of July, 2022 S.MANIKUMAR, CJ Before Kerala Lok Ayukta, Thiruvananthapuram, in Complaint No.982/2018, respondent Nos.1 to 3/complainants therein, sought for the following reliefs:
(i) The Hon'ble Lok Ayukta may be pleased to pass an order directing the respondents to stop the illegal proceedings for taking possession, eviction and auction proceeding initiated by the 1 st respondent as per Exhibits P1, P2, P3, P4 notices.
(ii) The Hon'ble Lok Ayukta may be pleased to direct the respondent to produce the "Statement of Account" in this regard.
(iii) The Hon'ble Lok Ayuktha may be pleased to direct the 2 nd and 3rd respondents to consider Ext.P5 Requisition Letter dated 25/10/2018.
(iv) The Hon'ble Lok Ayukta may be pleased to conduct a detailed investigation into the actions/inactions on the part of respondents and draw a report U/s.
12 (1) of Kerala Lok Ayukta Act, 1999.
(v) Such other relief which the Hon'ble Upa Lok Ayukta deems fit and proper in the circumstances of the case.
2. Exhibit P1 before the Lok Ayukta is a possession notice dated 21.03.2017 issued by Authorised Officer of Thrissur District Co-operative Bank Ltd., Thrissur, the petitioner herein, to respondents 1 to 3/the complainants therein, demanding to repay the entire loan amount of Rs.1,35,24,539/-, as on 28.02.2017.
3. Exhibit P2 before the Lok Ayukta is a possession notice dated 02.08.2017 issued by the Authorised Officer, Thrissur District Co-operative Bank Ltd., Thrissur, the W.P.(C) NO.39931/2018 3 petitioner herein to respondent Nos.1 to 3/the complainants therein, demanding to pay Rs.1,41,05,489/- as on 30.06.2017.
4. Exhibit P3 is a notice published by the petitioner herein, in Deshabhimani Daily dated 8.8.2017, demanding the respondents to pay a sum Rs.1,31,08,690/-, as on 31.11.2016, and Exhibit P4 is a notice issued by the learned Advocate Commissioner, appointed by the learned Chief Judicial Magistrate in Crl.M.P.No.6016/2018, dated 17.10.2018, for taking possession of the property mortgaged to the loan by the complainants.
5. Before the Lok Ayukta, complainants sought to quash Exhibits P1 to P4 notices by issuing an order directing the respondent therein, to stop the proceedings initiated for taking possession, eviction and auction proceedings initiated by the Authorised Officer of the writ petitioner bank. 6. After considering the rival submissions and material on record, on 2nd November, 2018, the Lok Ayukta, in Complaint No. No.982/2018 C & I.A.No.1645/2018, passed the following order:
"ORDER Heard the counsel for the complainant. Though there is no much merit in the complaint being a loan transaction the proposed sale of the scheduled properties offered as security for paltry amounts to cause harassment to complainants is something which has to be averted and they are to be given an opportunity to discharge the debt, if at all they are vigilant in discharging the debt. For that purpose, I admit the complaint for regular investigation In the meanwhile, in case each of the complainants deposits an amount of Rs.1,00,000/- each in respect of loan accounts, further proceedings pursuant to Exts.P1, P2, P3 and P4 shall stand stayed for a period of two months Deposit shall stand stayed for a period of two months. Deposit shall positively be made within one month from today. In case the deposit is not so made, the stay shall stand W.P.(C) NO.39931/2018 4 automatically vacated and the respondents shall be entitled to proceed with the proposed sale. It is made clear that if further extension of stay also is required, complainants will have to deposit further amounts of at least Rs. 1,00,000/- each.
Communicate this order to respondents through special messenger as desired by counsel for the complainant. In as much as special messenger is being deputed, notice in the complaint as also notice in the IA shall also be served to respondents through the same special messenger. For RN, posted to 21/12/2018."
7. Short facts leading to the filing of the writ petition are that, petitioner is a Central Society, registered under the provisions of the Kerala Co-operative Societies Act, 1969 and rules framed thereunder. According to the petitioner, the bank is deeply aggrieved by entertaining the complaint preferred by respondents 1 to 3 by Kerala Lok Ayukta, in the matter of recovery of loan under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, (hereinafter called, the SARFAESI Act, 2002).
8. Petitioner has further stated that respondents 1 to 3 were granted three simple loans of Rs. 40 Lakhs each on 22/12/15, 23/12/15 and 23/12/15; security for the loan was the property owned and possessed by the 2nd respondent viz., Kadeeja consisting of 25.63 cents of land in Sy.No.148/3 of Kaipparambu Village and period of loan was 120 months with default clause. According to the petitioner, respondents 1 to 3 committed default, and thereupon, the loan was declared as NPA and proceedings were initiated under the SARFAESI Act, 2002. Section 13(2) notices under the Act were issued on 20.12.2016, 21.12.2016 and 4.1.2017, as evident from Exhibits P1, P2 and P3 respectively.
9. Petitioner has further stated that proceedings initiated against the mortgaged W.P.(C) NO.39931/2018 5 property under the SARFAESI Act, 2002 were challenged by respondents 1 to 3 before this Court in W.P(C) No.10369/2017. Prayers made in W.P.(C) No.10369/2017 are extracted hereunder:
(i) To issue a writ of certiorari or other appropriate writ or order quashing Exhibit-P1 notice dated 21.03.2017 issued by the petitioner herein:
(ii) To issue a writ of mandamus or other appropriate writ or order directing the respondent to permit the petitioners to pay the overdue amount legally due in convenient instalments along with future instalments from May 2017 onwards and regularize the loan accounts of the petitioners."
10. Noticing that an amount of Rs. 22,21,592/- is the defaulted arrears and total outstanding is Rs.1,36,00,000/-, a learned single Judge passed Exhibit P4 judgment dated 27.3.2017, which reads as under:
"The petitioner is aggrieved with the recovery proceedings initiated against the mortgaged property.
The learned counsel for the respondent Bank submits that Rs.22,21,592/- is the defaulted arrears and the total outstanding is Rs.1,36,00,000/-. The petitioner undertakes that the entire defaulted arrears will be paid up by 30.05.2017.
3. In such circumstance, the recovery shall be kept in abeyance only to facilitate such payment. However, if the defaulted arrears are not paid within that date, then, the authorised officer of the Bank shall be present in the property on 01.06.2017 and the petitioner shall surrender the property without demur. If the defaulted arrears are so paid, then, the Bank shall consider if regularization can be allowed; if the EMIS for March to May 2017 are paid on or before 30.06.2017".
11. It is stated by the writ petitioner - Thrissur District Co-operative Bank Ltd., Thrissur, that respondent Nos.1 to 3 had not honoured the judgement of this Court nor paid the amount due, which resulted in the Bank proceeding further with the matter.
W.P.(C) NO.39931/2018 6Petitioner has also submitted that the matter was proceeded with and an application under Section 14 of the SARFAESI Act, 2002 was filed seeking assistance of the court for taking possession of the secured assets by approaching the Chief Judicial Magistrate Court, Thrissur and the learned Chief Judicial Magistrate, in Crl.M.P.No.6016/2018, issued Exhibit-P5 order dated 05.10.2018, appointing learned Advocate Commissioner to take possession of the property, in accordance with law.
12. Petitioner has further stated that it was at this juncture, respondents 1 to 3 have approached the 4th respondent - Lok Ayukta, with Exhibit-P6 Complaint No.982/2018 dated 27.10.2018. In the said complaint, it was alleged that though respondents 1 to 3 requested for a short time for regularisation of the loan, time was not granted. It was also alleged in the complaint that there was maladministration on the part of the Bank and sought for the reliefs stated supra.
13. Hon'ble Lok Ayukta, issued a notice to the Bank, to appear on 21.12.2018, produced herewith as Exhibit P7 dated 02.11.2018, and issued Exhibit P8 interim order dated 2.11.2018 staying the proceedings under the SARFAESI Act, 2002.
14. Petitioner has further stated that, going by the statutory provisions, Lok Ayukta has no power, authority or jurisdiction, to entertain the complaint and in order to substantiate the same, petitioner has relied on the decisions of the Hon'ble Apex Court in Punjab National Bank v. O.C.Krishnan and others [(2001) 6 SCC 569] and State Bank of India v. Mathew K.C.[ILR 2018(1) Kerala 479], for consideration.
15. On the basis of the facts and circumstances, Mr.P.C.Sasidharan, learned W.P.(C) NO.39931/2018 7 counsel for petitioner, by placing reliance on the above decisions, submitted that Exhibit P7 notice dated 02.11.2018 and Exhibit P8 interim order dated 2.11.2018 in Complaint No.982/2018 C & IA 1645/2018 are issued without any power, authority or jurisdiction.
In that view of the matter, Thrissur District Co-operative Bank Ltd., Thrissur, represented by its General Manager, the petitioner herein, is constrained to file the instant writ petition seeking the following reliefs:
i) To issue a writ of certiorari, or other appropriate writ, order or direction to quash Exts. P6, P7 and P8.
ii) To declare that the Lok Ayukta or Upa Lok Ayukta has no power, authority or jurisdiction to entertain a complaint/ petition in the nature of Ext.P6 and conduct investigation in the matter.
iii) To award compensation to the petitioner since the respondents 1 and 3 have abused and misused the forum of Lok Ayukta for stalling the recovery proceedings initiated against them and suppressing material facts.
16. Grounds on the basis of which the writ petition has been filed, are as under:
A. Entertainment of Ext.A6 petition, issuance of Ext.P7 notice, and also the issuance of Ext.P8 interim orders, by the Lok Ayukta on the face of it are illegal, without power, authority or jurisdiction. B. Lok Ayukta can only investigate into complaints involving grievances or allegations. The term 'grievance' or 'allegation' has got a definite meaning and content in terms of the Lok Ayukta Act, 1999. Even going by the petition before the Lok Ayukta, it could be seen that the facts stated therein constitute an 'allegation' or 'grievance', within the term will not as it defined under the Act and, hence, the petition is not maintainable, going by the contents of the petition.
C. It is further contended that the mal-administration alleged is also totally unsustainable since the bank is only proceeding to recover a commercial loan granted by it of sufficient security and that the bank is entitled to proceed with the realization of the amount due by initiating appropriate proceedings against the secured assets, which cannot be found fault with. D. It is further contended that the proceedings were initiated under the W.P.(C) NO.39931/2018 8 SARFAESI Act, 2002. Time and again the Hon'ble Supreme Court has categorically laid down the law that even the Constitutional courts shall not interfere with the proceedings under the SARFAESI Act and the weighty observations of the Hon'ble Apex Court is seen totally ignored by the Upa Lok Ayukta.
E. It is further contended that since the interference of a proceedings initiated under the SARFAESI Act is settled by the Hon'ble Supreme Court, the matter is not further elaborate, but it is submitted that the Upa Lok Ayukta has shown scant in regard to the law laid down by the Hon'ble Supreme Court of India.
F. It is further contended that respondents 1 to 3 themselves earlier approached this Court and a learned Single Judge shown indulgence in the matter. But that order was not complied with and it is in these circumstances, the respondents were proceeded with under the SARFAESI Act which this petitioner cannot be found fault with. There is no wilful suppression of the material facts as well.
G. It is also contended that Lok Ayukta has no power, authority or jurisdiction to pass an interim order in the nature of Ext.P8. It is submitted that the power of the Lok Ayukta to pass orders is only with reference to the production of documents or conduct search etc. Passing of interim orders is confined to Sections 10 and 11 of the Act and not otherwise. It is submitted that the Lok Ayukta cannot adjudicate the validity of recovery proceedings under the SARFAESI Act.
H. It is further contended that the Lok Ayukta, at best, can submit a report recommending action. It cannot order recovery of a debt due from the creditor. The Lok Ayukta has far exceeded in its powers and jurisdiction in issuing Ext.P7 notice. Since Ext.P7 notice is issued without power, authority or jurisdiction and the petitioner is not liable to submit its jurisdiction before the Lok Ayukta, the petitioner is constrained to approach before this Court."
17. Heard learned counsel for the petitioner and perused the material available on record.
18. Exhibit-P1 notice dated 20.12.2016 issued by the petitioner bank under Section 13(2) of the SARFAESI Act, 2002 is reproduced:
"THRISSUR DISTRICT CO-OPERATIVE BANK LTD., HEAD OFFICE, SAHAKARANA SATHABDHI MANDIRAM, KOVILAKATHUMPADAM, THRISSUR-680 022.
Name and Address of the Borrower:-W.P.(C) NO.39931/2018 9
1) Suharath, W/o. Abas, residing at Ambalath House, Keechery P.O., Pin. 680 501 Desom Keechery, Village Eranellur Taluk Thalappilly, District Thrissur. Name and address of Guarantors
2) Musthafa, S/o. Alavi, residing at Thayamkulam House, Kaiparambu P.O., Pin. 680 516 Desom Kaiparambu Village, Kaiparambu Taluk Thrissur, District Thrissur.
3) Kadeeja, W/o. Musthafa, residing at Thayamkulam House, Kaiparambu P.O., Pin 680 546 Desom, Kaiparambu Village, Kaiparambu, Taluk Thrissur, District Thrissur.
Demand Notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is hereby informed you that the No.1 among you accepted the following loan amount from the Head Office Branch of Thrissur District Co-operative Bank on the guarantee of party No.2,3 among you and upon the security of the property scheduled hereunder.
Nature of the Loan : Simple Loan, No. 80008645729
Amount of Loan : 40,00,000/- (Forty Lakhs Only)
Date of Document : 23-12-15
Date of Notice : 05-11-16
As on 30-11-16 Rs. 44,33,092/- (Rupees Forty Four Lakhs Forty Three Thousand and Ninety Two only) is due to the bank.
For the above said financial assistance, you have furnished the following security to the Bank. The party No.3 among you have created security interest over the property scheduled hereunder by way of Equitable Mortgage by Deposit of Title Deed.
You have defaulted the repayment of the aforesaid secured debt/instalment thereof in violation of the sanction terms, and other terms agreed upon and the account has been classified by the bank as Non Performing Asset and the party No.1 among you as principal debtor and others are guarantors are jointly and severally liable to pay to the Bank, the aforesaid amount of Rs.44,33,092/- (Rupees Forty Four Lakhs Forty Three Thousand and Ninety Two only) with future interest at 14% and penal interest at 2% till the repayment in full. The Bank is secured creditor as defined under section 2(zd) of the Act with respect to the outstanding amount referred above.
We, therefore, require you by this notice issued under section 13(2) of the Act to discharge your aforesaid liabilities to the Bank in full within 60 days from this notice, failing which, the Bank as secured creditor shall be constrained, without prejudice to any of its other rights and remedies, to take recourse to various measures prescribed under sub-section (4) of Sec. 13 of the Act and in particular. a. To take possession of all or any of the secured assets more fully described in this notice and transfer them by way of lease, assignment to sale for realising the secured debts.
W.P.(C) NO.39931/2018 10b. To take over the management of the secured assets and transfer by way of lease, assignment or sale for realising the secured asset. c. To appoint any person to manage the secured assets, the possession of this has been taken over by the secured creditor.
d. To require at any time by notice in writing, any person who has acquired any of secured assets from the borrower and from whom any money is due or may become due to the borrower to pay the secured creditor, so much money as is sufficient to pay the secured debt.
You are hereby informed that you shall not, after receipt of this notice, deal with the scheduled assets in any manner whatsoever to the prejudice of the interest of the secured creditor without the prior written consent of the secured creditor, in compliance with sub-section (13) of Sec.13 of the Act. As per Section 29 of the Act if any person contravenes the provisions of the Act or Rules made there under, he shall be punishable with imprisonment for a term which may extend to one year, or with fine or with both.
You may further note that in the event of your failure to discharge the liability in full within 60 days from the date of this notice the bank takes any action under 13(4) of the Act, you shall further be liable to pay to the Bank all costs charges and expense incurred by the bank in this connection and in case the dues to the bank are not fully recovered with the sale proceeds of the secured assets, the bank shall proceed for the recovery of the balance from you personally and jointly.
This notice is issued to you without prejudice to the bank's legal rights to realise the debts from you.
SCHEDULE OF PROPERTY All that piece and parcel of land in Sy. 148/3 admeasuring about 25.63 Cent of land situated in Kaiparambu village, Thrissur Taluk, Thrissur District owned by Verumpattam as described in document No.2543/2000 of Mundur SRO.
BOUNDARIES
East : Road
North : Property of Ottumadathil Mani
West : Road
South : Property of Elavathur Dasan, S/o. Sankaranarayanan"
19. Exhibit-P2 notice dated 21.12.2016 issued by the petitioner bank under Section 13(2) of the SARFAESI Act, 2002 is reproduced:
"THRISSUR DISTRICT CO-OPERATIVE BANK LTD., HEAD OFFICE, SAHAKARANA SATHABDHI MANDIRAM, KOVILAKATHUMPADAM, THRISSUR-680 022. Name and Address of the Borrower:-
1) Kadeeja, W/o. Musthafa, residing at Thayamkulam House, Kaiparambu P.O., Pin.W.P.(C) NO.39931/2018 11
680 546 Desom, Kaiparambu Village, Kaiparambu Taluk, Thrissur, District Thrissur. Name and address of Guarantors
2) Musthafa, S/o. Alavi, residing at Thayamkulam House, Kaiparambu P.O., Pin. 680 516 Desom Kaiparambu Village, Kaiparambu Taluk Thrissur, District Thrissur.
3) Suharath, W/o. Abas, residing at Ambalath House, Keechery P.O., Pin. 680 501 Desom Keechery, Village Eranellur Taluk Thalappilly, District Thrissur. Demand Notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is hereby informed you that the No.1 among you accepted the following loan amount from the Head Office Branch of Thrissur District Co-operative Bank on the guarantee of party No.2,3 among you and upon the security of the property scheduled hereunder.
Nature of the Loan : Simple Loan, No. 80008645843
Amount of Loan : 40,00,000/- (Forty Lakhs Only)
Date of Document : 23-12-15
Date of Notice : 05-11-16
As on 30-11-16 Rs. 44,33,092/- (Rupees Forty Four Lakhs Forty Three Thousand and Ninety Two only) is due to the bank.
For the above said financial assistance, you have furnished the following security to the Bank. The party No.1 among you have created security interest over the property scheduled hereunder by way of Equitable Mortgage by Deposit of Title Deed.
You have defaulted the repayment of the aforesaid secured debt/instalment thereof in violation of the sanction terms, and other terms agreed upon and the account has been classified by the bank as Non Performing Asset and the party No.1 among you as principal debtor and others are guarantors are jointly and severally liable to pay to the Bank, the aforesaid amount of Rs.44,33,092/- (Rupees Forty Four Lakhs Forty Three Thousand and Ninety Two only) with future interest at 14% and penal interest at 2% till the repayment in full. The Bank is secured creditor as defined under section 2(zd) of the Act with respect to the outstanding amount referred above.
We, therefore, require you by this notice issued under section 13(2) of the Act to discharge your aforesaid liabilities to the Bank in full within 60 days from this notice, failing which, the Bank as secured creditor shall be constrained, without prejudice to any of its other rights and remedies to take recourse to various measures prescribed under sub section(4) of Sec.13 of the Act and in particular. a. To take possession of all or any of the secured assets more fully described in this notice and transfer them by way of lease, assignment to sale for realising the secured debts.
b. To take over the management of the secured assets and transfer by way of lease, assignment or sale for realising the secured asset.
W.P.(C) NO.39931/2018 12c. To appoint any person to manage the secured assets, the possession of this has been taken over by the secured creditor.
d. To require at any time by notice in writing, any person who has acquired any of secured assets from the borrower and from whom any money is due or may become due to the borrower to pay the secured creditor, so much money as is sufficient to pay the secured debt.
You are hereby informed that you shall not, after receipt of this notice, deal with the scheduled assets in any manner whatsoever to the prejudice of the interest of the secured creditor without the prior written consent of the secured creditor, in compliance with sub-section (13) of Sec.13 of the Act. As per Section 29 of the Act if any person contravenes the provisions of the Act or Rules made there under, he shall be punishable with imprisonment for a term which may extend to one year, or with fine or with both.
You may further note that in the event of your failure to discharge the liability in full within 60 days from the date of this notice the bank takes any action under 13(4) of the Act, you shall further be liable to pay to the Bank all costs charges and expense incurred by the bank in this connection and in case the dues to the bank are not fully recovered with the sale proceeds of the secured assets, the bank shall proceed for the recovery of the balance from you personally and jointly.
This notice is issued to you without prejudice to the bank's legal rights to realise the debts from you.
SCHEDULE OF PROPERTY All that piece and parcel of land in Sy. 148/3 admeasuring about 25.63 Cent of land situated in Kaiparambu village, Thrissur Taluk, Thrissur District owned by Verumpattam as described in document No.2543/2000 of Mundur SRO.
BOUNDARIES East : Road North : Property of Ottumadathil Mani West : Road South : Property of Elavathur Dasan, S/o. Sankaranarayanan"
20. Exhibit-P3 notice dated 4.1.2017 issued by the petitioner bank under Section 13(2) of the SARFAESI Act, 2002 is reproduced:
"THRISSUR DISTRICT CO-OPERATIVE BANK LTD., HEAD OFFICE, SAHAKARANA SATHABDHI MANDIRAM, KOVILAKATHUMPADAM, THRISSUR-680 022. Name and Address of the Borrower:-
1) Musthafa, S/o. Alavi, residing at Thayamkulam House, Kaiparambu P.O., Pin. 680 516 Desom Kaiparambu Village, Kaiparambu Taluk Thrissur, District Thrissur.
Name and address of Guarantors W.P.(C) NO.39931/2018 13
1) Suharath, W/o. Abas, residing at Ambalath House, Keechery P.O., Pin. 680 501 Desom Keechery, Village Eranellur Taluk Thalappilly, District Thrissur.
2) Kadeeja, W/o. Musthafa, residing at Thayamkulam House, Kaiparambu P.O., Pin. 680 546 Desom, Kaiparambu Village, Kaiparambu Taluk, Thrissur, District Thrissur. Demand Notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is hereby informed you that the No.1 among you accepted the following loan amount from the Head Office Branch of Thrissur District Co-operative Bank on the guarantee of party No.2,3 among you and upon the security of the property scheduled hereunder.
Nature of the Loan : Simple Loan, No. 80008626943
Amount of Loan : 40,00,000/- (Forty Lakhs Only)
Date of Document : 23-12-15
Date of Notice : 05-11-16
As on 22-12-16 Rs. 42,22,506/- (Rupees Forty Two Lakhs Twenty Two Thousand Five Hundred and Six only) is due to the bank.
For the above said financial assistance, you have furnished the following security to the Bank. The party No.3 among you have created security interest over the property scheduled hereunder by way of Equitable Mortgage by Deposit of Title Deed.
You have defaulted the repayment of the aforesaid secured debt/instalment thereof in violation of the sanction terms, and other terms agreed upon and the account has been classified by the bank as Non Performing Asset and the party No.1 among you as principal debtor and others are guarantors are jointly and severally liable to pay to the Bank, the aforesaid amount of Rs.44,33,092/- (Rupees Forty Four Lakhs Forty Three Thousand and Ninety Two only) with future interest at 14% and penal interest at 2% till the repayment in full. The Bank is secured creditor as defined under section 2(zd) of the Act with respect to the outstanding amount referred above.
We, therefore, require you by this notice issued under section 13(2) of the Act to discharge your aforesaid liabilities to the Bank in full within 60 days from this notice, failing which, the Bank as secured creditor shall be constrained, without prejudice to any of its other rights and remedies to take recourse to various measures prescribed under sub section (4) of Sec.13 of the Act and in particular. a. To take possession of all or any of the secured assets more fully described in this notice and transfer them by way of lease, assignment to sale for realising the secured debts.
b. To take over the management of the secured assets and transfer by way of lease, assignment or sale for realising the secured asset. c. To appoint any person to manage the secured assets, the possession of this has been taken over by the secured creditor.
W.P.(C) NO.39931/2018 14d. To require at any time by notice in writing, any person who has acquired any of secured assets from the borrower and from whom any money is due or may become due to the borrower to pay the secured creditor, so much money as is sufficient to pay the secured debt.
You are hereby informed that you shall not, after receipt of this notice, deal with the scheduled assets in any manner whatsoever to the prejudice of the interest of the secured creditor without the prior written consent of the secured creditor, in compliance with sub-section (13) of Sec.13 of the Act. As per Section 29 of the Act if any person contravenes the provisions of the Act or Rules made there under, he shall be punishable with imprisonment for a term which may extend to one year, or with fine or with both.
You may further note that in the event of your failure to discharge the liability in full within 60 days from the date of this notice the bank takes any action under 13(4) of the Act, you shall further be liable to pay to the Bank all costs charges and expense incurred by the bank in this connection and in case the dues to the bank are not fully recovered with the sale proceeds of the secured assets, the bank shall proceed for the recovery of the balance from you personally and jointly.
This notice is issued to you without prejudice to the bank's legal rights to realise the debts from you.
SCHEDULE OF PROPERTY All that piece and parcel of land in Sy. 148/3 admeasuring about 25.63 Cent of land situated in Kaiparambu village, Thrissur Taluk, Thrissur District owned by Verumpattam as described in document No.2543/2000 of Mundur SRO.
BOUNDARIES
East : Road
North : Property of Ottumadathil Mani
West : Road
South : Property of Elavathur Dasan, S/o. Sankaranarayanan"
21. Exhibit-P5 order dated 05.10.2018 passed by the Chief Judicial Magistrate, Thrissur in Crl.M.P. No.6016/2018 reads thus:
"ORDER
1. This petition is filed u/s. 14 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 seeking assistance of the Court in taking possession of the secured assets.
2. Petitioner is a secured creditor and the respondents either borrowers or guarantors have allegedly failed to repay the loan amount which exceeds twenty percent of the principal amount and interest thereon. The account of the borrower has already been classified as a non-W.P.(C) NO.39931/2018 15
performing asset. The petitioner claims that even after the issuance of notice u/s. 13(2) of the above Act the respondent has not discharged the amount of Rs.40,00,000/- due and the authorised officer of the petitioner is entitled to take the possession of the secured asset as the provision of the above Act and rules made thereunder was complied with.
3. Perused the petition, and affidavit and heard the petitioner. Petitioner is obviously a secured creditor and the scheduled property is a secured asset. I am satisfied that the respondents have failed to positively respond to the demand made u/s. 13(2) of the Act. The petitioner apprehends resistance from the respondent who is allegedly in possession of the property. Hence it is only just and proper to allow the application by taking possession of the secured assets scheduled in the petitioner and delivering the same to the petitioner/secured creditor. Allowing application, Adv. Hemanth is appointed as officer for taking possession of the secured assets scheduled in the petition from the respondents after due notice and for delivering the same to the petitioner.
4. S.H.O of Peramangalam or any other related P S shall render assistance to the Advocate appointed in case it is requested by the officer/advocate appointed. An amount of Rs.6,000/- shall be paid to the Advocate as batta and the petitioner shall file a proper memo, before the Court showing the receipt of the same by the Advocate within seven days. In case the Commissioner finds the service of surveyor essential for either identifying or demarcating security, the assistance of a surveyor from the panel of Civil Court could be availed and the petitioner shall pay the necessary batta to that surveyor. The learned Advocate shall comply with the direction and file a report on or before 6/12/18. Issue a copy of this order to the Advocate."
22. Exhibit-P7 notice dated 02.11.2018 directing the petitioner to appear in person 21.12.2018 is extracted hereunder:
KERALA LOK AYUKTA COMPLAINANT NO............982/2018-C.............
Between
Mustaffa, Kaipparambu & 2 Ors. Complainant
And
The Authorised Officer,
TDCB Ltd., Thrissur & 2 Ors.
R3-General Manager, TDCB Ltd.,
TUDA Road, Kovilakathumpadam Respondents
W.P.(C) NO.39931/2018 16
To
Take notice that you have been arrayed as third respondent in the above mentioned Complaint filed before this Forum. After conducting preliminary enquiry, the Lok Ayukta/the Upa Lok Ayukta has taken cognizance of the Complaint and ordered investigation into the Complaint. As per Section 10 of the Kerala Lok Ayukta Act, the Lok Ayukta or an Upa Lok Ayukta may, by a search warrant, authorize any Police Officer to conduct a search or carry out an inspection in accordance with the provisions of the Code of Criminal Procedure. Warrant issued in this respect shall, for all purposes, be deemed to be a warrant issued by a court under section 93 of the Code of Criminal Procedure.
Under Section 14 of the Act, where, after investigation into a complaint involving allegations of Corruption, favourtism, lack of integrity the Lok Ayukta or an Upa Lok Ayukta is satisfied that the allegations against the public servant are substantiated; it is competent for the Lok Ayukta or the Upa Lok Ayukta to declare that the public servant concerned shall not continue to hold the post held by him.
You are directed to appear in person or through counsel at 10.30 a. m on 21/12/2018. You are also directed to file statements (verified and attested statements) on or before the above date.
Government officials arrayed as respondents in their official capacity shall file statements through the Senior Government Pleader attached to the office of the Special Attorney, Kerala Lok Ayukta. But officials arraigned eo- nominee by names will not be permitted to appear though government Pleader unless there is specific government orders in that regard.
Given under the hand seal of the office on the 2 nd day of November, 2018.
By order Sd/-
Addl. Deputy Registrar"
23. Exhibit-P8 order dated 02.11.2018 passed by Kerala Lok Ayukta in Complaint No.982/2018 C & IA 1645/18 is extracted hereunder:
"ORDER Heard the counsel for the complainant. Though there is no much merit in the complaint being a loan transaction the proposed sale of the scheduled properties offered as security for paltry amounts to cause harassment to complainants is something which has to be averted and they are to be given W.P.(C) NO.39931/2018 17 an opportunity to discharge the debt, if at all they are vigilant in discharging the debt. For that purpose, I admit the complaint for regular investigation. In the meanwhile, in case each of the complainants deposits an amount of Rs.1,00,000/- each in respect of loan accounts, further proceedings pursuant to Exts.P1, P2, P3 and P4 shall stand stayed for a period of two months. Deposit shall positively be made within one month from today. In case the deposit is not so made, the stay shall stand automatically vacated and the respondents shall be entitled to proceed with the proposed sale. It is made clear that if further extension of stay also is required, complainants will have to deposit further amounts of atleast Rs.1,00,000/- each. Communicate this order to respondents through special messenger as desired by counsel for the complainant. In as much as special messenger is being deputed, notice in the complaint as also notice in the IA shall also be served to respondents through the same special messenger. For RN, posted to 21/12/2018.
Sd/-
JUSTICE K.P. BALACHANDRAN, UPA LOK AYUKTA"
24. We could see that, after due consideration of the material on record, a Hon'ble Division Bench of this Court, vide order dated 7th December, 2018 in W.P.(C) No.39931 of 2018, passed the following order:
"ORDER The challenge here is to the order of the Kerala Lok Ayukta in the Complaint No.982/2018-C of the three defaulting borrowers of the Thrissur District Co- operative Bank Limited, whereby the Lok Ayukta had stayed the recovery proceedings initiated by the Bank subject to deposit of Rs.1,00,000/- each by the three complainants/borrowers.
2. The learned standing counsel Sri.P.C.Sasidharan appearing for the petitioner bank projects that the same three complainants had earlier filed the W.P.(C) No.10369 of 2017, where instalment benefit was ordered in their favour by the learned Judge on 27.3.2017 (Ext.P4). The court in the same proceeding observed that Rs.22,21,592/- is the defaulted arrears and the total outstanding is Rs.1,36,00,000/- and the petitioners would undertake to liquidate the entire defaulted arrears by 30.5.2017. The Court observed that the recovery proceedings initiated by the bank is kept in abeyance only to facilitate the repayment proposed by the borrowers and if the defaulted arrears are not paid within the specified time, the borrowers shall surrender the secured property to the bank official on 1.6.2017 without demur.W.P.(C) NO.39931/2018 18
3. The learned standing counsel would submit that the borrowers failed to keep to their commitment and not a single penny was tendered and thereafter they have filed the instant complaint before the Lok Ayukta. The counsel projects that the total outstanding against the four loans is to the tune of Rs.1,64,55,715/- and the direction issued by the Lok Ayukta to pay Rs.1,00,000/- in each of the loan account would hardly protect the interest of the bank. Then he points out that the Lok Ayukta does not have any jurisdiction to pass such an order interfering with the recovery proceedings initiated by the bank.
4. Having considered the above, let notice on admission be issued to the respondents. The petitioner to serve notice on the respondent Nos.1, 2 and 3 by speed post, returnable within three weeks. In the interim, the impugned Exts.P6, P7 and P8 orders of the Lok Ayukta in the Complaint No.982/2018-C are stayed."
25. Though notice has been served on respondent No.1 and his name is also shown in the cause list, there is no appearance either in person or through counsel.
Therefore, we are constrained to consider the case on merits, which we do so.
26. In Punjab National Bank v. O.C.Krishnan and others [(2001) 6 SCC 569], the Hon'ble Apex Court held as under:
"6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."W.P.(C) NO.39931/2018 19
27. In State Bank of India v. Mathew K.C. [ILR 2018(1) Kerala 479], the Hon'ble Apex Court held as under:
"It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same."
28. As rightly contended by Mr.P.C.Sasidharan, learned standing counsel for the writ petitioner, that when Special Tribunals are constituted for the purpose of adjudicating disputes, arising out of security interest/ recovery, under the provisions of Recovery of Debts due to Banks and Financial Institutions Act, 1993, which nomenclature has been changed subsequently as the Recovery of Debts and Bankruptcy Act, 1993 and also the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002; and when there are special provisions to vindicate the grievances against any recovery proceedings initiated by banking and financial institutions under the RDB Act, 1993 and SARFAESI Act, 2002, we hold that Lok Ayukta has no jurisdiction to entertain any complaint.
W.P.(C) NO.39931/2018 20Giving due consideration to the grounds raised and taking note of the decisions cited supra, we have no hesitation to hold that Exhibit P8 interim order dated 02.11.2018 passed by Kerala Lok Ayukta in Complaint No.982/2018 C & IA 1645/18, without jurisdiction, is liable to be set aside. Accordingly, the writ petition is allowed and Exhibit-P8 order dated 02.11.2018 is set aside.
Sd/-
S.MANIKUMAR CHIEF JUSTICE Sd/-
SHAJI P.CHALY
smv JUDGE
W.P.(C) NO.39931/2018 21
APPENDIX OF WP(C) 39931/2018
PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 20.12.2016.
EXHIBIT P2 TRUE COPY OF THE NOTICE DATED 21.12.2016,
EXHIBIT P3 TRUE COPY OF THE NOTICE DATED 4.1.2017.
EXHIBIT P4 TRUE COPY OF THE JUDGMENT IN WPC.10369 OF 2017 DATED
27.3.17.
EXHIBIT P5 TRUE COPY OF THE ORDER DATED 5.10.2018 IN
CRL.M.P.NO.6016/2018.
EXHIBIT P6 TRUE COPY OF THE COMPLAINT NO.982/2018 DATED
27.10.2018.
EXHIBIT P7 TRUE COPY OF THE NOTICE DATED 2.11.2018.
EXHIBIT P8 TRUE COPY OF THE ORDER DATED 2.11.2018.