Patna High Court - Orders
Ganga Memorial And Educational Society vs The Central Bank Of India on 30 July, 2019
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.12574 of 2019
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1. Ganga Memorial and Educational Society through its Secretary, Manoj
Kumar @ Manoj, age about 51 years, male, S/o Sri Naresh Prasad Sinha,
Resident of NH-31, Kharura, P.O. and P.S.- Harnaut, Distt.- Nalanda.
2. Manoj Kumar @ Manoj Son of Sri Naresh Prasad Sinha Resident of Flat
No. 407, Maharaja Kameshwar Complex, Fraser Road, Patna.
3. Smt. Nibha Sinha @ Nibha Daughter of Manoj Kumar @ Manoj Resident of
Flat No. 407, Maharaja Kameshwar Complex, Fraser Road, Patna.
4. Smt. Damyanti Devi Wife of Shri Umeshwar Prasad Singh Resident of
Village- Chamarichak, P.O.- Jamsaut, P.S.- Shahpur, District- Patna.
5. Sri Dilip Kumar Singh Son of Shri Umeshwar Prasad Singh Resident of
Village- Chamarichak, P.O.- Jamsaut, P.S.- Shahpur, District- Patna.
... ... Petitioner/s
Versus
1. The Central Bank of India through its Chief Manager, Regional Office,
Block- B, Second Floor, Maurya Lok Complex, Patna-1.
2. Authorized Officer Central Bank of India, Regional Office, Patna Maurya
Lok Complex, Patna- 800001.
3. M/s Keshav Hospital Pvt. Ltd. Through Managing Director, Dr. Kumud
Kamini, Wife of Dr. Ashok Kumar, resident of B/9 Finance Colony,
Khajpura, Ward No. 02, Rukanpura, Patna.
4. Smt. Sulekha Kumari Daughter of Shri Aditya Kumar Resident of New
Jaganpura, Patna.
5. Chairperson Debt Recovery Appellate Tribunal, 147-A-58/1, Jawahar Lal
Nehru Road, Tagore Town, Allahabad.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr.Arbind Kumar Jha, Advocate
Mr. Sanjay Singh Thakur, Advocate
For the Respondent/s : Mr.Ajay Kumar Sinha, Advocate
Mr. Sandeep Kumar, Adocate
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CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
ORAL ORDER
2 30-07-2019Heard learned counsel for the petitioners and learned counsel representing the Bank.
This writ application has been preferred seeking the Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 2/15 following reliefs:
"The writ application is being filed for issuance of a writ of certiorari for quashing the order dated 27.05.2019 passed by Hon'ble Chairperson, Debt Recovery Appellate Tribunal, Allahabad by which Ld. Chairperson dismissed the appeal for the reason that there is no ground to interfere in the impugned order dt. 15.11.2018 passed in SA 152 of 2018 through both Tribunal and Appellate Tribunal in course of enquiry failed to comply with the requirement of natural justice and decision of Appellate Tribunal is having no nexus with fact and made out a case for adjudication which was not even part of the pleading.
The petitioner further prays for issuance of writ of mandamus to respondents concerned from proceeding further and give effect to order passed in appeal Sr. No. 271 of 2018 dt. 27.05.2019.
The petitioner further prays for direction to secured creditor to exercise it's right with limitation i.e. except to take possession of the property and alienate the same only to the extent necessary to realize the actual amount due to him.
The petitioner further seeks indulgence of this Hon'ble Court to allow the petitioner's to redeem the property in pursuance of law laid down by Hon'ble Apex Court in the case of Mathew Varghese Vs. M. Amritha Kumar and others since reported in (2014) 5 SCC 610 and Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 3/15 restrain the bank from effecting the registration of the sale certificate which otherwise defeat the right of redemption of the petitioners.
The petitioner further prays for issuance of any other writ/writs order/orders and direction/directions for which petitioner may be found entitled."
By filing Interlocutory Application No. 01 of 2019 the petitioners have sought to amend the writ application calling upon this Court to quash the registered sale deed dated 18.06.2019 executed by the Authorized Officer in favour of respondent no. 3.
The facts disclosed in the writ application would reveal that earlier the Bank had sanctioned and disbursed some financial assistance to the petitioners which the petitioners could not re-pay as a result thereof a demand notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI Act, 2002') raising a demand of Rs. 9,98,17,606/- (Nine Crore Ninety Eight lakhs Seventeen thousand Six hundred six) as on 10.12.2015 was issued giving them 60 days time to pay back the outstanding amount of the Bank and liquidate the loan but when they failed to do so, a possession notice under Section 13(4) of the Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 4/15 SARFAESI Act, 2002 was issued on 25th day of February, 2016.
The petitioners challenged the possession notice dated 25.02.2016, during pendency of the secularization application e- auction sale notice was issued, thus the same was also challenged in S.A. No. 59 of 2016. After hearing the parties, the Debts Recovery Tribunal, Patna (hereinafter referred to as the 'Tribunal') recorded a finding that so far as possession notice is concerned, Bank has followed the mandatory provisions, no fault was found up to this stage but then the learned Tribunal found that the respondent Bank had not followed the mandatory procedures under the SARFAESI Act, 2002 with regard to the e-auction sale which was conducted by the Authorized Officer of the Bank during the pendency of the SARFAESI Application No. 59 of 2016, therefore, the SARFAESI Application was allowed and e-auction sale notice published in the newspaper on 08.06.2016 was set aside. While doing so the Tribunal also directed that the possession of the property be restored in favour of the applicants. One Goivnda Construction was the successful bidder.
The said order was challenged by the Bank before this Court in a writ application but in the meantime, the Bank decided to return the amount to the auction purchaser and Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 5/15 thereby realized that now nothing remains for adjudication in the writ application, therefore, the same was sought to be withdrawn and this Court accordingly allowed the Bank to withdraw the writ application. The order passed by the Writ Court reads as under:
"Heard learned counsel for the petitioner Central Bank of India and learned counsel for the respondents. Petitioner seeks withdrawal of the writ application as in view of the SARFAESI action they have proceeded further and, such, this writ application has become infructuous.
The writ application is dismissed as withdrawn."
It appears that the Bank decided to issue a fresh possession notice and after issuance of the possession notice the Bank proceeded to issue an e-auction sale notice dated 03.08.2018. The petitioners did not challenge the fresh possession notice under Section 13(4) of the SARFAESI Act, 2002 but filed S.A. No. 152 of 2018 under Section 17 of the SARFAESI Act, 2002 challenging the e-auction sale notice dated 03.08.2018 which were issued by the respondents Bank for recovery of Rs. 9,98,78,606/- with interest and other charges. The parties were heard before the Tribunal and finally the Tribunal decided S.A. No. 152 of 2018 vide its judgment dated 15.11.2018 holding that the respondent Bank had followed the procedures as laid down under the SARFAESI Act, 2002 Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 6/15 and Security Interst (Enforcement) Rules, 2002 (hereinafter referred to as the 'Rules of 2002) while selling the properties in e-auction sale on 07.09.2018 in favour of the private respondents and therefore, the SARFAESI Application was liable to be dismissed.
The petitioners preferred an appeal under Section 18 of the SARFAESI Act, 2002 before the Debts Recovery Appellate Tribunal, Allahabad (hereinafter referred to as the 'Appellate Tribunal') giving rise to filing Appeal Sr. No. 271 of 2018. the Appellate Tribunal dismissed the appeal by holding that no ground to interfere with the impugned order could be made out by the appellants.
It is evident from the Interlocutory Application No. 01 of 2019 that during all this period since there was no stay operating against the Bank, the Authorized Officer of the Bank has executed a registered sale deed on 18.06.2019 in favour of the respondent no. 3 who has purchased the property in e- auction for Rs. 12,50,50,000/-.
I. A. No. 01 of 2019 is allowed.
Parties have been heard on merit.
Mr. Arbind Kumar Jha, learned counsel representing the petitioner has submitted before this Court that both the Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 7/15 Tribunal as well as the Appellate Tribunal could not appreciate that after passing of the order dated 21.09.2016 in S.A. No. 59 of 2016 the Bank was required to hand over the possession of the properties to the petitioners and if it was not done, all subsequent actions were liable to be held bad in law. Learned counsel has also argued that the valuation of the property in question was not properly done in the subsequent round of sale when it was substantially brought down by saying that the property stands at the side roads whereas the fact is that the property stands on the main road. Learned counsel then argued that no individual notice of e-auction sale was served upon the petitioners, therefore, the Bank had not followed the mandatory provisions of Rule 8 (6) of the Rules of 2002. He has also relied upon the judgment of the Hon'ble Supreme Court in the case of Mathew Varghese Vs. M. Amritha Kumar and others since reported in (2014) 5 SCC 610 to submit that if the procedures which were mandatory in nature were not followed then the subsequent sale is liable to be held bad in law.
Mr. Ajay Kumar Sinha, learned counsel representing the Bank has opposed the writ application. It is submitted that the petitioners are only trying to keep the litigation pending by repeated filing of writ applications before this Court. It is Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 8/15 submitted that the petitioners were given a credit limit of Rs. 8,55,00,000/-, they defaulted in payment of the amount and was served with a demand notice for payment of Rs. 9,98,17,606/- as on 10.12.2015. The said demand notice could not draw the attention of the petitioners and as they failed to pay the amount under the demand notice, the Bank came out with a possession notice on 25th February, 2016. It is submitted that in S.A. No. 59 of 2016 although the possession notice was not interferred with but subsequently while allowing the said application the Tribunal set aside the e-auction sale only and directed for restoration of possession. At that point of time M/s Govindas Construction was the highest bidder for Rs. 9,26,60,000/-(Nine Crore twenty six lakhs sixty thousand). The Bank being aggrieved by the order of the Tribunal moved in writ application before this Court but then because the sale was getting delayed, the Bank decided to withdraw the writ application and to go for issuance of a fresh possession notice even though in S.A. No. 59 of 2016, action of the Bank in taking possession was found in accordance with law. It is submitted that after issuance of the fresh possession notice the petitioners did not challenge the same but when an e-auction sale notice was issued on 03.08.2018 the petitioners filed S.A. No. 152 of 2018 Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 9/15 challenging the e-auction sale notice. By this time more than 2 years had elapsed in litigation and three e-auction notices went without any response.
It is submitted that the Tribunal as well as the Appellate Tribunal have considered each and every aspect of the matter including the issue of valuation of the property and service of sale notice and then both the Tribunals have returned a finding of fact that the valuation of the property had to be reduced because on the given valuation the property was not being sold despite four times e-auction sale notice published by the Bank. Both the Tribunal as well as the Appellate Tribunal have also returned the findings that the individual notice was sent to the applicants by speed post on 04.08.2018 which were served upon them on 06.08.2018 and the e-auction sale was held on 07.09.2018, therefore, clear 30 days notice was given to the petitioners. It is, thus, submitted that this Court sitting in its writ jurisdiction under Article 226 of the Constitution of India need not disturb the findings of facts by appreciating and re- appreciating the materials available on the record. It is submitted that in any case now the sale has been confirmed and registered sale deed stands executed in favour of the auction purchaser. Property has been sold at Rs. 12,50,50,000/- (Twelve Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 10/15 Crore fifty lakhs fifty thousand).
Having heard learned counsel for the petitioners as well as the Bank and after perusal of the orders passed by the Tribunal in S.A. No. 152 of 2018 and the order passed by the Appellate Tribunal in Appeal Sr. No. 271 of 2018, this Court finds that the issues which are being agitated by the learned counsel for the petitioners before this Court have been well addressed by both the Tribunals. In paragraph '16' of its judgment the Tribunal has after extensively quoting the relevant Rule 8(5) of the Rules of 2002 held that in the present Case the properties were put on e-auction sale earlier on several occasions but no bidders turned up and further the earlier e- auction sale notice had also been challenged by the applicants but in respect of the valuation of the properties no dispute was raised by the applicants. The Tribunal recorded that in respect of low valuation of the properties the applicants have not filed any authenticated documentary proof in support of their submission. When this issue was raised before the Appellate Tribunal, the Appellate Tribunal did not interfere with this on the account of the alleged low valuation of the property taking a view that earlier the property was put on e-auction on several occasions, the valuation report was prepared taking the rate of main road Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 11/15 but then since the properties could not be sold earlier, hence, the value of the property was reduced.
Mr. Jha has given much emphasis on the observation of the Appellate Tribunal in paragraph 17 of it's order saying that the earlier valuation report was made treating the rate of main road whereas the property was situated on the side road but Mr. Sinha, learned counsel representing the Bank has explained that although the Appellate Tribunal has recorded that the property was situated on the side road as one of the reasons but that is not the basis of its judgment rather the judgment is based on the fact that since the property were not being sold on the prevailing rate then the value of the property was reduced which was still not below the circle rate. It is for this reason that the property was sold at a price not below the circle rate. On the given valuation earlier the property was not being sold. Earlier purchaser had offered the highest price at Rs. 9,26,60,000/- (Nine Crore twenty six lakhs sixty thousand) only. The appellate authority did not find any wrong with the valuation report and refused to interfere with the same. In this case property has been sold at Rs. 12,50,50,000/- (Twelve Crore fifty lakhs fifty thousand) against reserve price of Rs. 12,50,00,000/- (Twelve Crore fifty lakhs).
Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 12/15 As regards the service of notice also this Court finds that there is a finding recorded by the Tribunal as well as the Appellate Tribunal that the track records submitted by the Bank demonstrates that the notices were sent on 04.08.2018 and were delivered to the appellants on 06.08.2018. Both the Tribunals, therefore, fond that the sale was conducted after expiry of 30 days from the date of sale notice on 07.09.2018.
This Court has gone through the impugned orders. It is not the case of the petitioners that any of the objections or issues raised by them before the Tribunal or Appellate Tribunal have not been considered. In fact the findings of the Appellate Tribunal in paragraphs no. 17, 18, 19, 20 and 21 are wroth taking note of hereunder for a ready reference:
"17. Coming to the merits of the case, the first objection is with regard to the valuation of the properties. There is no dispute on the settled proposition of law that the Bank is required to get the best price of the property and to strictly follow the procedures as laid down in the judgment of Ram kishun Vs. State of Uttar Pradesh (Supra). Earlier, the bank has tried four times before the present sale, but it could not be materialized for want of bidders. The bank has placed on record the circle rate of the Government prescribed for the land along with the variations of the rate for the locations. The earlier valuation report was made, treating the rate of main road, whereas the property was situated on the side road, therefore, the present valuation report was prepared on the basis of the rates prevailing for the side roads. Since the properties could not be sold earlier, hence the value of the property was reduced. However, the same was not below the circle rate in Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 13/15 any case. Thus, it cannot be said that the valuation report was defective by any means. The appellants have not challenged the valuation report of the Bank at relevant time nor in the earlier S.As. and further, no contrary report has been filed by the appellants to demonstrate that the property is wroth of higher value than the valuation made by the authorized valuer of the Bank.
18. The second objection was qua service of sale notice. As per Rule 8(6) of the Rules, 2002, a clear 30 days sale notice is required to be served on the borrowers and strict compliance is required as laid down by the Hon'ble Supreme Court in Canara Bank Vs. M. Amarender Reddy (Supra). In the instant case, the sale notice dated 03.08.2018 was sent by Speed Post on 04.08.2018 to the appellants. The Tribunal below relying upon the postal receipts found it to be as proper service. However, no track record of A.D. was there before the Tribunal below, but during the course of arguments, it was contended on behalf of the Bank that the notices were delivered and track record is there, which may be filed. It was allowed to be filed with advance copy to the counsel for the appellants, hence the same were filed, to which some objections were also filed on behalf of the appellants. The track record as submitted by the Bank demonstrates that the notices sent on 04.08.2018 were delivered to the appellants on 06.08.2018. Though, it was objected by the appellants that this track record is not reliable, but I find no reason to disbelieve the track record obtained from India Post. Besides, in normal course, the speed post may be delivered within two days. Thus, it is proved that the notices were delivered on 06.08.2018 and the sale was conducted after expiry of 30 days from the date of sale notice on 07.09.2018.
19. I respectfully agree with the principles laid down in Rakesh Birani Vs. Prem Narain Sehgal (Supra) and in Haryana Urban Dev. Authority Vs. Orchid Infrastructure Developers P. Ltd. (Supra) that the sale is subject to the confirmation of secured creditor i.e. Bank and also no right is vested in the highest bidder for confirmation of sale. In the case at hand, the letter of confirmation was sent by the Authorized officer, but it cannot be said that the secured creditor has not confirmed the sale, because nothing is there on record Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 14/15 to infer as contrary. The secured creditor after taking decision at appropriate level, conveys the confirmation only through the authorized officer, therefore, there is no lacuna on this count.
20. So far as extension of time is concerned, admittedly, the sale price was not deposited within the stipulated period of 15 days, but the period was extended by the Bank vide letter dated 18.09.2018 and the period was extended up to 22.10.2018. The amount was deposited on or before 20.10.2018. Thus, the same was deposited within extended time. Though, it was argued, in this context, that no written agreement in this regard between the Bank and the auction purchaser was filed by the Bank, but I find no substance in this argument for the reason that the extension was sought by the auction purchaser vide letter dated 18.09.2018 and the same was allowed and conveyed in writing vide letter dated 18.09.2018. Thus, it was a written consent between the auction purchaser and the secured creditor. So, the amount was deposited in accordance with Rule 9 (4) of the Rules, 2002.
21. So far as the sale on reserve price and the consent of the borrowers in this regard, are concerned, admittedly, the properties of lots no. 2 & 3 were sold on reserve price and no consent of the borrowers/mortgagors was taken. The Hon'ble High Court of Madrash in K. Raamaselvam Vs.Indian Overseas Bank (Supra) has held that the consent of the mortgagor is must, if the property is sold on reserve price, whereas the Hon'ble Kerala High Court after considering the judgment of the Hon'ble Madra High Court has held in Shri Varghese Ukken vs. State Bank of India (Supra) that the consent of the borrowers is required, only if the property is sold below the reserve price and the term "such price" used in second proviso to Rule 9 (2) of the Rules, 2002 only means "such lesser price". The judgment of the Hon'ble Kerala High Court is later in point of time and has also considered the judgment of the Hon'ble Madras High Court, therefore, in my humble and respectful opinion, the principle laid down by the Hon'ble Kerala High Court is applicable in the present case."
This Court is of the considered opinion that both the Patna High Court CWJC No.12574 of 2019(2) dt.30-07-2019 15/15 Tribunal as well as the Appellate Tribunal have considered the case of the petitioners and have recorded a finding of fact which cannot be said to be perversed or contrary to the materials placed before them. This Court sitting in its writ jurisdiction would not therefore, act as a fact finding court so as to disturb the concurrent findings of the Tribunals that too when no perversity have been found with the same. This Court finds that sale deed of the property has already been registered in favour of the auction purchasers.
In the opinion of this Court, this application has no merit. It is accordingly, dismissed.
(Rajeev Ranjan Prasad, J) avin/-
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