Karnataka High Court
Sri Syed Moinuddin Quadri vs The State Of Karnataka on 9 January, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2024:KHC:1074
WP No. 35607 of 2010
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 9TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 35607 OF 2010 (GM-KSFC)
BETWEEN:
SRI. SYED MOINUDDIN QUADRI
SINCE DEAD REPRESENTED BY LRS
1. MRS. SHAHNAZ BEGUM @ SHAMEEM
W/O SYED MOINUDDIN QUADRI
AGED ABOUT 65 YEARS
2. SYEDA MEHNAZ
D/O SYED MOINUDDIN QUADRI
AGED ABOUT 26 YEARS
BOTH ARE RESIDING AT
NO.272/3D, VIJAYANAGAR
Digitally signed by
PADMAVATHI B K 2ND STAGE, MYSORE - 570 019.
Location: HIGH ...PETITIONERS
COURT OF
KARNATAKA (BY SRI. MEGHACHANDRA D. N., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
DEPARTMENT OF REVENUE
VIDHANA SOUDHA
BENGALURU - 560 001
REPRESENTED BY ITS SECRETARY
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NC: 2024:KHC:1074
WP No. 35607 of 2010
2. KARNATAKA STATE FINANCIAL CORPORATION
NO. 2716, L-4, 1ST FLOOR
SOWRABHA CHAMBERS
SRI HARSHA ROAD, LASHKAR MOHALLA
MYSORE - 570 001.
REP. BY THE ASST. GEN. MANAGER
3. THE VILLAGE ACCOUNTANT
KOPPAL, KOPPAL DISTRICT.
4. THE SPECIAL TAHASILDAR
(BANGALORE URBAN ZONE)
KARNATAKA STATE FINANCIAL CORPORATION
8TH FLOOR, JAYANAGAR SHOPPING COMPLEX
4TH BLOCK, JAYANAGAR
BENGALURU - 560 011.
5. DEPUTY COMMISSIONER
OFFICE OF DEPUTY COMMISSIONER
KANDAYA BHAVAN
BENGALURU DISTRICT
BENGALURU - 01.
NOTE: CAUSE TITLE AMENDED VIDE COURT ORDER
DATED 17.01.2020
...RESPONDENTS
(BY SRI. SPOORTHY HEGDE, HCGP FOR R1, R3 AND R5;
SRI. GURURAJ JOSHI, ADVOCATE FOR R2 AND R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH ORDER OF ATTACHMENT DATED 15/16.09.2009
ISSUED BY RESPONDENT NO.4 AT ANNEXURE P TO THE WRIT
PETITION AND ETC.,
THIS WRIT PETITION, COMING ON FOR FURTHER
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
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NC: 2024:KHC:1074
WP No. 35607 of 2010
ORDER
The petitioners are before this Court calling in question an order of attachment dated 15/16-09-2009 issued by the 4th respondent - Special Tahsildar seeking to attach the property of the petitioners.
2. Heard Sri Meghachandra.D.N., learned counsel appearing for petitioners, Sri Spoorthy Hegde, learned High Court Government Pleader appearing for respondents 1, 3 and 5 and Sri Gururaj Joshi, learned counsel appearing for respondent Nos.2 and 4.
3. Facts in brief germane are as follows:
The petitioner - Syed Moinuddin Quadri, now deceased, is the original borrower of money from the hands of Karnataka State Financial Corporation ('Corporation' for short). A mortgage deed is executed by the petitioner as a security of loan amount of Rs.15 lakhs advanced by the Corporation on 17-02-1984. The petitioner defaults in payment to the Corporation which leads the Corporation to issue a notice on -4- NC: 2024:KHC:1074 WP No. 35607 of 2010 23-11-1995. The petitioner prefers P.Mis.No.400 of 1996 which later came to be registered as O.S.No.4463 of 2002 to recover the losses that he has suffered qua other entities.
On 11-02-1997 yet another demand notice is issued against the petitioner. The demand notice depicted Rs.10,33,525/- to be the total amount in due in the loan accounts of the petitioner.
The petitioner fails to pay. Under Section 29 of the State Financial Corporations Act, 1951 ('Act' for short), the Corporation put the property for sale and the property was sold in favour of one Sri. Mohammed Vaseem and the Corporation recovered Rs.10,55,000/-. On such amount being recovered from the hands of Sri. Mohammed Vaseem, the successful auction purchaser, a release/discharge deed was executed by the Corporation in favour of the petitioner. The Discharge Deed recorded that Rs.10,55,000/- has been recovered. Therefore, the loan stood completely discharged.
4. After the said discharge, the Corporation issued a notice to the petitioner on 15-03-2001 depicting that the amount of Rs.10,31,655/- is still in due from the petitioner. Long thereafter, on 02-06-2009 contending that there is a due -5- NC: 2024:KHC:1074 WP No. 35607 of 2010 of Rs.33,97,110/- which is not fulfilled by the petitioner, Section 32(g) proceedings were instituted by the Corporation by order dated 25-02-2009 directing recovery of the amount in due as arrears of land revenue. The proceedings having taken further, the 4th respondent issues a notice on 15-09-2010 to recover the amount of Rs.33,97,110/- as the amount in due and to be recovered as arrears of land revenue. It is at that juncture, the petitioner has knocked at the doors of this Court in the subject petition.
5. Learned counsel appearing for the petitioner, taking this Court through the documents appended to the petition demonstrate that both the accounts put together the demand notice was issued for Rs.10,33,525/-. The petitioner did not pay. The respondents put the property to auction by issuance of a sale notice. The successful bidder one Sri. Mohammed Vaseem was handed over the property pursuant to the said sale. The Corporation then executes a discharge deed in favour of the auction purchaser. Notwithstanding even a rupee in the loan account not remaining to be paid, the Corporation later issues a notice of demand of Rs.33 lakhs and that has now -6- NC: 2024:KHC:1074 WP No. 35607 of 2010 grown to mountainous proportions. He would submit that the action of the Corporation is, on the face of it, arbitrary.
6. Per-contra, learned counsel Sri. Gururaj Joshi representing the Corporation would seek to defend the action by seeking to contend that amount was still due and it has grown to mountainous proportions. As the loan has to take its regular course, this Court should not interfere with the order passed, as the petitioner is in default of the loan amount. He would refer to certain Project Review Report which depicts that there is amount pending payment at the hands of the petitioner.
7. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
8. The afore-narrated facts are not in dispute. The petitioner is the borrower from the hands of the Corporation. The application seeking finance from the hands of the Corporation was submitted in two loan accounts, one term -7- NC: 2024:KHC:1074 WP No. 35607 of 2010 loan account in which Rs.15 lakhs had been sanctioned on 26-10-1983, but no amount was disbursed in the said loan account, this is an admitted fact. In the other term loan, an amount of Rs.11,59,000/- was disbursed to the petitioner on 27-03-1991 out of the term loan sanctioned of Rs.12,89,000/-. This again is not in dispute. The petitioner defaulted in repayment of the loan. This led the Corporation in issuing a demand notice on the petitioner on 11-02-1997. The demand notice reads as follows:
"²æÃAiÀÄÄvÀ SÁ¢ægÀªÀgÉ, «µÀAiÀÄ: ¸Á®zÀ ªÀÄgÀÄ¥ÁªÀw §UÉÎ.
---
¤ªÀÄä SÁvÉ ¸ÀASÉå 65024401 ªÀÄvÀÄÛ 65024470gÀ°è ¢£ÁAPÀ 15.01.97PÉÌ gÀÆ.10,33,525UÀ¼ÀÄ (ºÀvÀÄÛ ®PÀëzÀ ªÀÄƪÀvÀÛªÀÄÆgÀÄ ¸Á«gÀzÀ LzÀÄ £ÀÆgÀÄ E¥ÀàvÉÛöÊzÀÄ gÀÆ¥Á¬ÄUÀ¼ÀÄ ªÀiÁvÀæ) ¨ÁQ EzÀÄÝ CzÀgÀ ¸ÀA§AzsÀªÁV ¤ªÀÄUÉ FUÁUÀ¯Éà C£ÉÃPÀ ¥ÀvÀæUÀ¼À£ÀÄß CzÀ®èzÉ ¢£ÁAPÀ 27.11.96gÀAzÀÄ WÀlPÀªÀ£ÀÄß ¸Áé¢üãÀ ¥Àr¹PÉƼÀÄîªÀ £ÉÆÃnøÀ£ÀÄß PÀ¼ÀÄ»¹zÀÝgÀÆ ¸ÀºÀ vÁªÀÅUÀ¼ÀÄ ªÀÄgÀÄ¥ÁªÀw ªÀiÁqÀ®Ä ªÀÄÄAzÉ §A¢®èªÉAzÀÄ w½¸À®Ä «µÁ¢¸ÀÄvÉÛãÉ. ¤ªÀÄä SÁvÉAiÀÄ°è F PɼÀV£ÀAvÉ ¨ÁQ¬ÄgÀÄvÀÛzÉ.
¸Á®zÀ ²®ÄÌ 7,94,000
C¸À®Ä PÀAvÀÄUÀ¼ÀÄ 7,94,640
§rØ PÀAvÀÄUÀ¼ÀÄ 2,78,746
EvÀgÉ RZÀÄð 5,139
_________
MlÄÖ 10,33,525
__________
£ÀªÀÄä ¥ÀvÀæzÀ ¢£ÁAPÀ 27.11.96gÀ ¥ÀæPÁgÀ ¤ªÀÄUÉ w½¹zÀAvÉ £ÀªÀÄä C¢üPÁjUÀ½AzÀ ¤ªÀÄä WÀlPÀªÀ£ÀÄß ¤ÃªÀÅ ¸À» ªÀiÁrPÉÆnÖgÀĪÀ CqÀªÀiÁ£À ¥ÀvÀæzÀ µÀgÀvÀÄÛUÀ¼À ¤AiÀĪÀÄ 8 ªÀÄvÀÄÛ 10gÀ ¥ÀæPÁgÀ ¸Áé¢üãÀ¥Àr¹PÉƼÀî¯ÁVzÉ.
F ¥ÀvÀæ vÀ®Ä¦zÀ 7 ¢ªÀ¸ÀUÀ¼ÉƼÀUÁV ¨ÁQ ºÀt ¥ÁªÀwªÀiÁqÀ®Ä ¤ÃªÀÅ ªÀÄÄAzÉ §gÀ¢zÀÝ°è ¤ªÀÄä WÀlPÀªÀ£ÀÄß §»gÀAUÀªÁV ºÀgÁdÄ ªÀiÁqÀ®Ä wêÀiÁð¤¸À¯ÁUÀĪÀÅzÀÄ.-8-
NC: 2024:KHC:1074 WP No. 35607 of 2010 EzÀPÉÌ ¸ÀA§A¢ü¹zÀAvÉ, AiÀiÁªÀÅzÉà RZÀÄð ªÀÄvÀÄÛ ¥ÀjuÁªÀÄUÀ½UÉ ¤ÃªÉà dªÁ¨ÁÝgÀgÁUÀ¨ÉÃPÁUÀÄvÀÛzÉ. ¤ÃªÀÅ EzÀPÉÌ CªÀPÁ±À ¤ÃqÀĪÀÅ¢®èªÉAzÀÄ £Á£ÀÄ £ÀA©gÀÄvÉÛãÉ."
(Emphasis added) The demand notice was unequivocal. It demanded Rs.10,33,525/- on all the accounts in which the loan had been disbursed in favour of the petitioner. The disbursal is only in one account at Rs.11,59,000/-. The petitioner did not pay the amount. The Corporation then puts up the property of the petitioner for auction. The auction purchaser is one Sri. Mohammed Vaseem. The auction purchaser pays the amount of Rs.10,55,000/-, the rate at which the auction was conducted. After the payment was received from the hands of Sri. Mohammed Vaseem, a Discharge Deed is executed by the Corporation. The Discharge Deed assumes significance as it records the entire payment being received from the hands of the auction purchaser as was demanded by the hands by the petitioner. Some clauses of the Discharge Deed reads as follows:
"Sri Mohammed Vaseem, of M/s Kothari Finance and Properties Private Limited, residing at No. 578, "ANUGRAHA" 14th Cross 3rd Main, Gokulam III stage, Mysore hereinafter called as the purchaser/Second Party.-9-
NC: 2024:KHC:1074 WP No. 35607 of 2010 M/s Banu Steel Industires, a proprietor ship concern having its place of business at Plot No.139 (A). Belagola Industrial Area. Metagalli. Mysore-2 and office at No.1157. HAL II Stage. Indiranagara. Bangalore and represented by its proprietor Sri S. M. Quadri S/o S T Quadri, aged about 44 years. residing at No.139(A). Belagola Industrial Area. Mysore has availed loan of Rs.15.00 lakhs for establishment of above said industry.
WHEREAS, the property/title deeds described in the schedule hereunder was mortgaged by M/s. Bhanu Steel Industries. Represented by its proprietor Sri Quadri S M under Mortgage Deed. Dated 17th February 1984. Registered as No.1452/83-84, Book-I. Volume-698, Pages 1-22 dated 2nd day of March 1984 in the Office of the Sub-Registrar. Mysore Taluk, Mysore as security for the loan of Rs. 15.00 lakhs advanced by the Corporation.
WHEREAS, M/s. Bhanu Steel Industries became a defaulter in repayment of the loan due to the corporation. The corporation has taken over the unit u/s. 29 of SFCs ACT and sold to Sri Mohammed Vaseem of M/s. Kothari Finance and properties Private limited. Now it has been changed to M/s. Karishma Enterprises Pvt. Ltd., for a sale consideration of Rs.10.55 lakhs. The purchaser has paid the sale proceeds and requested the corporation to reconvey/release the schedule property described hereunder from the charge created under the said mortgage deed."
(Emphasis added) The Discharge deed records that the property was put up for sale consideration of Rs.10,55,000/- and the purchaser has paid the sale proceed and requested the Corporation to release the property in his favour by clearing the charge created under the mortgage deed.
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NC: 2024:KHC:1074 WP No. 35607 of 2010
9. The Corporation has discharged the property and released it from the charge that is created from the mortgage deed. This was only on full and final payment by the auction purchaser and was in full and final closure of the dues of the petitioner, as the dues projected was at Rs.10,33,525/-. What the Corporation received is Rs.10,55,000/- from the hands of the auction purchaser, which was slightly in excess of what the demand was made. As such, the entire proceedings should have been closed. But the Corporation issues a notice to the petitioner on 15-3-2001 again demanding Rs.10,31,655/- from the hands of the petitioner in the same account for the same property what was auctioned and when the entire amount was received from the hands of the auction purchaser. The said proceeding is taken forward and proceedings under Section 32(g) of the Act is instituted by the Corporation.
10. Section 32(g) reads as follows:
"[32G.Recovery of amounts due to the Financial Corporation as an arrear of land revenue.- Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, The Financial Corporation or any person authorized by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of
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NC: 2024:KHC:1074 WP No. 35607 of 2010 the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue.]"
Section 32(g) permits recovery of the amount due to the Corporation as arrears of land revenue. The Corporation projects an imaginary due from the hands of the petitioner and communicates to the Tahsildar to recover Rs.33,97,110/- as arrears of land revenue.
11. As observed hereinabove, not even a rupee was in balance to be paid from the hands of the petitioner to the Corporation, as the Corporation had already recovered the entire amount from the hands of the auction purchaser and had released the property from the charge i.e., from the mortgage created while granting loan in favour of the petitioner. Section 32(g) of the Act could not have been invoked at all.
12. The learned counsel for the Corporation has produced a project review report by way of a memo before this Court. The project review report depicts that the balance in the
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NC: 2024:KHC:1074 WP No. 35607 of 2010 account is nil. If the balance in the account is nil, where from the interest spring is a mystery. Learned counsel for Corporation seeks to decipher the mystery, but makes a futile effort, as there is no explanation that can be projected, as the balance that is shown is zero, and the interest shown is as Rs.1,36,68,329/-. It is this action of the Corporation that shocks the conscience of the Court. Therefore, the petition deserves to be allowed.
13. For the aforesaid reasons, the following:
ORDER
(i) Writ Petition is allowed.
(ii) Order of attachment dated 15/16-09-2009 issued by the 4th respondent stands quashed.
(iii) All further proceedings taken up by the respondents pursuant to the order dated 16-09-2009 stands quashed.
Sd/-
JUDGE BKP List No.: 2 Sl No.: 51/CT:SS