Madhya Pradesh High Court
Jagdish Prahladdas Rathi Thru. Karta ... vs Uco Bank And 4 Ors. on 19 May, 2017
Author: Virender Singh
Bench: Virender Singh
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HIGH COURT OF MADHYA PRADESH: BENCH AT
INDORE
D.B.:Hon'ble Shri P.K. Jaiswal
Hon'ble Shri Virender Singh, JJ.
Writ Petition No.1361/2013
JAGDISH PRAHLAD DAS RATHI & OTHERS
VERSUS
UCO BANK & ORS.
*******
Shri A.K. Sethi, learned Senior Advocate with Shri
Rishabh Sethi, Advocate for the petitioners.
Shri V.P. Khare, Advocate for respondents No.1 and 2.
Shri Piyush Mathur, learned Senior counsel with Shri A.
Vijayvargiya, Advocate for the respondents No.4 and 5.
Shri Ajay Bagadiya, Advocate for auction purchaser /
intervener.
*******
R.P. No.166/2015
JAGDISH PRAHLAD DAS RATHI & OTHERS
VERSUS
UCO BANK & ORS.
*******
Shri A.K. Sethi, learned Senior Advocate with Shri
Rishabh Sethi, Advocate for the petitioners.
Shri V.P. Khare, Advocate for respondents No.1 and 2.
Shri Ajay Bagadiya, Advocate for auction purchaser /
intervener.
*******
ORDER
(Passed on this 19th day of MAY, 2017) Per P.K. Jaiswal, J:-
By this writ petition under Article 227 of the Constitution of India, the petitioners are praying for the following relief :-
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"(a) The order dated 10.1.2013 (Annexure P/28) passed by DRAT, Allahabad in Appeal No.R/196/2012, as well as the order dated 15.10.2012, passed by DRT (Ann.P/26) in Securitisation Application No.15/09 and auction-notice dated 13.1.2013 published in daily news paper "Patrika" to auction 2nd secured assets, ie., House No.15, Chhota Sarafa, Indore fixed on 15.2.2013 (Ann.P/29), may kindly be ordered to be quashed.
(b) The sale - certificate dated 12.3.2009 (registered on 21.3.2009) by the Respondent Bank in favour of the respondents No.4 and 5 be quashed.
(c) To award the cost of present petition from the respondents to the petitioners.
(d) To grant any other relief, which this Hon'ble court may deem fit to grant in favour of the petitioners and against the respondents."
2. The facts of the case are that the respondent No.3 - M/s. Swastik Distributor was borrower and the present writ petitioners are guarantors / mortgagors.
3. The petitioner No.1 (guarantor) has mortgaged plot No.21, Model Town, Indore on 30.8.2002 and and petitioners No.2 to 5 (guarantors) also mortgaged their property situated at 15/4, Chhota Sarafa, Indore with the respondents No.1 and 2 -
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Bank to provide C.C. limit to respondent No.3 M/s. Swastik Distributors Proprietor P.N. Rathi HUF 'Karta' Shri Umesh Rathi (borrower) to the tune of Rs.1.5 crore, which was taken from 2.9.2002. On 30.9.2006, the accounts of borrowers were declared NPA. On 2.2.2007, the respondents No.1 and 2 Bank issued notice under Section 13(2) to all borrowers and guarantors. On 25.6.2007 bank to take symbolic possession of both properties under Section 13(4) affixed possession notice on both the properties, ie., Plot No.21, Model Town Colony, Indore and House No.15/4, Chotta Sarafa, Indore. The possession of the was taken on 16.6.2007. On 1.7.2007, the bank issued possession notice under Section 13(4) read with Section Rule 8 (1), for both secured properties and also published notice in the news paper mentioning dues of other borrowers on 31.7.2007. On 7.8.2007, the bank published auction-notice fixing auction-notice 17.8.2007. A Writ Petition No.10931/2007 was preferred by the seven borrowers at principal seat,
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Jabalpur. On 16.8.2007, auction-notice was stayed, but thereafter, the writ petition was dismissed as withdrawn on 1.10.2007 with liberty to pursue the Securitization Appeal No.45/2007, before the DRT. The petitioners preferred Securitisation Appeal No.45/2007, before the DRT, Jabalpur, whereby the interim order was passed by the DRT on 12.10.2007 stating "since applicants have not disputed that availment of the credit facilities they shall engineer their sincere efforts to repay the loan of the bank as per its demand by all possible means or through compromise by initiating a fresh proposal on or before 31.1.2012 if approved". Another Securitisation Appeal No.46/2007, was preferred by the petitioners whereby an interim order was passed by the DRT that "applicants shall deposit Rs.10,00,000/- on or before 25.1.2008 and Rs.10,00,000/-, within three weeks thereafter". The petitioners have failed to comply with orders passed by the DRT in Securitisation Appeals No.45/2007 and 46/2007, the DRT granted conditional stay on
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auctioning house, but did not grant stay on auctioning plot.
4. The first Writ Petition No.10931/2007, dated 1.10.2007, has been filed by the present writ petitioner No.2 and his wife Smt. Rekha Rathi and their other family members Smt. Veena Rathi, Smt. Neeta Rathi (wife of writ petitioner No.1) and collaboratively with the respondent No.3 of the present petitioner, who was petitioner No.1 in the instant petition. In the said writ petition, they also submitted a compromise proposal before the respondent bank and undertaking given by the petitioner therein therein that they will arrange the buyer, which will satisfy the total amount of dues. The same has been withdrawn on 1.10.2007 (Annexure R/3), which reads as under :-
"Learned counsel for the petitioners seek leave to withdraw this petition with liberty to pursue the appeal filed before the D.R.T. With the aforesaid liberty, the petition is dismissed as withdrawn."
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5. After that the same petitioners filed another Writ Petition No.867/2008 on 28.1.2008 at Indore, wherein, wife of the petitioner No.1 presented before the court and undertaking given by her before the High Court that the petitioners shall pay entire amount in four equal installments of Rs.50,50,537 on or before 15.3.2008. The petitioners also stated that she intended to get money for repayment by sale of property Plot No.21, Model Town Colony, Indore, which has already been mortgaged with the bank. The petitioner No.5 also stated that she would get earnest money by the buyer for repayment of the loan and finally pay the entire loan on or before 31.5.2008. The order dated 28.1.2008 vide (Annexrue R/4) and 1.2.2008 vide (Annexure R/5) are in W.P.No.867 of 2008, which reads as under :-
WP No. 867 OF 2008 1-2-2008 At the outset Shri A.K. Sethi, learned Senior Counsel appearing for the petitioners has informed the Court that an amount of Rs. 20,00,200/- had been deposited by the petitioners with
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respondent-UCO Bank on January 28, 2008 itself, as directed by this Court. Shri Sethi, has referred to the Bank receipt which had been put on record by the petitioners indicating the said deposit. The fact of the aforesaid deposit by the petitioners is not even disputed by the learned counsel appearing for the Bank. In fact, the respondent-bank has also produced on record a copy of the accounts statement indicating the amounts due from the petitioners from their five loan accounts.
A perusal of the accounts statement indicates that as on January 31, 2008, an amount of Rs. 1,96,16,853/28 is due and payable by the petitioners in its entirety, towards all the loan accounts. Shri M.K. Dubey, learned counsel for the respondent- Bank has also informed that if the petitioners pay the entire amount in four equated installments as undertaken by them before the Court on last date of hearing, then the equated installments come to an amount of Rs. 50,50,537/- but the entire amount shall have to be paid by the petitioners on or before May 31, 2008.
Shri A.K. Sethi, learned Senior counsel for the petitioners, on instructions from Smt. Reeta Rathi, petitioner No. 7, who is present in Court, undertakes on behalf of the petitioners, that the petitioners shall pay the first installment of Rs. 50,50,537/- on or before March 15, 2008. However, Shri Sethi states that the petitioners intend to get the money for repayment by sale of property No. 21, Model Town Colony, Indore, which has already been mortgaged with the respondent-Bank. Shri Sethi, states that the petitioners shall get an advance earnest money from the buyers for repayment of the loan, but the conveyance deed in favour of the purchasers shall only be executed by the petitioners/bank, as and when the entire loan of the respondent-Bank is repaid. Shri Sethi, also undertakes on behalf of the petitioners that the petitioners shall pay the entire loan amount on or before May 31,
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2008.
Keeping in view the fact that the petitioners have already shown their bonafides by depositing an amount of Rs. 20,00,000/- within the few hours of passing the order dated January 28, 2008, and are still ready to make the repayment of the entire loan withing the period as originally undertaken by them before this Court, I deem it appropriate to accept the offer made by the petitioners before this Court. In my considered view, the aforesaid acceptance of the offer of the petitioners, would resolve the entire controversy between the parties not only before this court but also before the Debts Recovery Tribunal and shall also be helpful in recovery of the dues of the bank.
Since as per equated monthly installments indicated by the Bank, the total amount payable up to May 31, 2008 comes to Rs. 2,02,02148/-, therefore, I deem it appropriate to direct the petitioners to deposit an amount of Rs. 50,50,537/- as the first installment with the respondent-Bank on or before March 15, 2008. Since the petitioners intend to generate money by selling property no. 21, Model Town Colony, Indore, to the buyers, who might want some more time to make entire payment, it would be appropriate to grant a liberty to the petitioners to pay the entire outstanding amount to make the total of Rs. 2,02,02148/- on or before May 31, 2008. On payment of the entire amount, the property in question, mortgaged with the respondent- Bank, shall stand released and the petitioners would be at liberty to execute the conveyance deed of the property, in accordance with law.
However, it is made clear that if the petitioners fail to make the payment/deposit the installment of Rs. 50,50,537/- on or before March 15, 2008, then they shall not be entitled to any further relief and in that situation, it would be open to the Bank to sell the mortgaged property of the
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petitioners forthwith. Further if the amount is also not paid on or before May 31, 2008, then no further relief shall be available to the petitioners and the present writ petition shall be deemed to have been dismissed.
However, the petitioners would also be at liberty, after paying the first installment, to pay the remaining amount in installments, is so desired, but the entire remaining amount shall be deposited on or before May 31, 2008.
With the aforesaid directions and liberties the present petition is disposed of . C.c. As per rules."W.P. No. 867 of 2008
28-1-2008 On instructions from Smt. Reeta Rathi, petitioner NO. 7, learned Senior counsel Shri A.K. Sethi, appearing for the the petitioners, states that the petitioners shall deposit a total amount of Rs. 20,00,000/- today itself (which sall include a demand draft of Rs. 9,98,400/- as directed by DRT vide its order dated Januay 25, 2008). On behalf of the petitioners, learned Senior counsel further undertakes that the entire amount due towards the bank shall be repaid by the petitioners in equated installments, within a period of ¾ months, as may be fixed by th Court. Learned Senior counsel stated that auction of the property of the petitioners, fixed for January 28, 2008, i.e. today itself, be stayed in the meantime.
List on February 1, 2008.
In the meantime, the auction of the property of the petitioners scheduled for January 28, 2008 and February 1, 2008 shall remain stayed, till further orders. However, the petitioners shall be required to deposit an amount of Rs. 20,00,000/- today itself up to 4:30 p.m. With the UCO Bank, Maharani Road Branch, Indore. However, it is made clear that if the amount
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of Rs. 20,00,000/- is not deposited by the petitioners up to 4:30 p.m. Today itself with the aforesaid Branch of UCO Bank, then the present petition shall be liable to be dismissed on this short ground alone.
Since the orders staying the auction have been passed in presence of learned counsel for the respondent-bank and Shri D.K. Sahu, Deputy, Chief Officer of the respondent-bank, the information with regard to passing of the stay order by this Court shall be communicated by the learned counsel and Shari Sahu to the Auctioning Authorities.
C.c. Out today.
6. The borrowers deposited Rs.20,02,000/- on 28.1.2008, but failed to deposit first installment till 15.2.2008, therefore, on 20.3.2008, the bank published fresh auction-notice on 20.3.2008, fixing auction date to be 28.3.2008.
7. On 27.3.2008, again Writ Petition No.2260/2008, was filed by the borrowers challenging the auction-notice. On 27.3.2008, the High Court stayed the auction dated 28.3.2008 and on 1.4.2008 passed an order directing, the petitioners to deposit Rs.1 Crore 62 lacs up to 15.4.2008, due to failing the borrowers in depositing the amount of Rs.1 Crore 62 lacs up to 15.4.2008, the stay granted earlier was
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vacated on 24.1.2008. Order dated 27.3.2008 and 1.4.2008 passed in W.P.No.2260/2008 reads as under :-
"W.P.No.2260/2008
27.3.2008 "Learned counsel for the respondents prays for and is granted a week's time to file reply and necessary documents.
Also heard on the question of admission.
Shri Pavecha submitted that the respondent / bank has not given a fresh 30 days notice before effecting the sale of immoveable property of the petitioner as is contemplated under Rule 9 (1) of the Security Interest (Enforcement) Rules. 2002. Per contra, respondent submit that the impugned auction notice has been issued in compliance of the order passed by the DRAT , Allahabad. It is also pointed out that after the order was passed by the DRAT, Allahabad, petitioner preferred a writ petition (W.P.No.867/2008) before this court which was finally disposed of on 1.2.2008 (Annx.P/25) and it was made clear that in case petitioner deposits a sum of Rs.50,50,537/- on or before 15.3.2008, the property in question mortgaged with the respondent / bank shall not be auctioned. It was also made clear that in case of default, it would be open to the bank to sell the mortgaged property of the petitioner forthwith.
In view of the rival contentions, it
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is directed that the respondent/bank may receive sealed tenders as per the dates mentioned in Annex. P/1, however, till the next date of hearing, the respondents shall not open the sealed tenders and proceed with the auction sale.
List the matter on 31.3.2008 for further orders.
C.c. to both sides on payment of usual charges."
1.4.2008.
Present petition is directed against the auction sale - notice (Annex P/1), whereby respondent bank is proceeding against the properties of the petitioners under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,.
After hearing the arguments at length, it emerges that petitioners have confirmed buyer in respect of open piece of plot situated in 21, Model Town Colony, Indore, who has offered to purchase the said plot for a sum of Rs.1,62,00,000/- as is clear from the agreement of sale (Annex P/27). Shri Pavecha, learned Sr. counsel appearing for the petitioners are ready and willing to ask the intending purchaser to deposit a sum of Rs.1,62,00,000/- in the bank towards the discharge of partial liability so that the title-deed in respect of said plot is returned to the petitioners for executing necessary conveyance in favour of intending purchaser. Shri Pavecha further submitted that a period
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of two months be given to complete the formalities.
Per contra, learned counsel for the respondents as well as Shri Singh submitted that period of two months is too long and some shorter time may be given to the petitioners for depositing the aforesaid amount and till then, the Respondent Bank be allowed to retain the bids received by it in respect of both the mortgaged properties as mentioned in sale proclamation.
After having heard learned counsel for the parties and considering the nature of the controversy, it would be in the interest of justice that petitioners are given time up to April 15th 2008 to deposit a sum of Rs.1,62,00,000/-with the respondent bank from today by way of Demand Draft drawn in favour of the respondent Bank. If the amount is so deposited within the time-frame, the Respondent Bank shall release the title- deed in respect of the open plot situated in 21, Model Town Colony, Indore in favour of the petitioners.
List this matter to report compliance on April 17, 2008.
c.c. as per rules.
8. On 20.2.2009, W.P.No.2260/2008, was disposed of as having been rendered infructuous. Order dated 20.2.2002 reads as under :-
"Ms. Shweta Pandit, learned counsel for the respondent No.1, states that after the vacation of ad-interim stay by this
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court, on April 21, 2008, a fresh auction notice was issued by the respondent- Bank and the property in question has already been sold.
In view of the aforesaid fact, it is apparent that the relief claimed by the petitioners in the present petition has been rendered infructuous.
Consequently, the present petition is disposed of as having been rendered infructuous.
9. The petitioner neither deposited nor paid the any amount on or before 31.8.2008. Finally sale of mortgaged property No.21, Model Town Colony, Indore was made on 21.3.2009 by bank for recovery of the outstanding money in accordance with law and direction given in WP's. On 21.3.2009, sale certificate was issued.
10. A Review Petition vide MCC No.248/2008 was filed for review / modification of order dated 1.2.2008. On 19.3.2008, the same was dismissed as withdrawn vide Annexure R/6. Order dated 19.3.2008 reads as under :-
"After arguing for sometime, learned counsel for the applicant wishes to withdraw the present application.
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Ordered accordingly.
C.c. as per rules."
11. In W.P.No.2260 of 2008, the petitioners therein challenged the action of the bank that the bank has not given the fresh 30 days notice before affecting the sale of mortgaged property of the petitioners as has contemplated under Rule 9 (1) of Securitization Interest (Enforcement) Rules, 2002.
12. Writ petitioners presented the Writ Appeal No.338/2008 on 23.4.2008 against the interlocutory order dated 21.4.2008 passed in W.P.No.2260/2008. On 15.5.2008, the Div. Bench, directed the appellants therein that they shall deposit with the bank a sum of Rs.10,00,000/-, within seven days on the date of order and remaining amount within 3 weeks thereafter. In the event, the appellants failed to discharge the liability and liquidate the amount of loan within the period aforesaid, the bank shall be free to proceed in accordance with law to release the amount outstanding and disposed of the writ appeal. Order
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dated 15.5.2008 reads as under :-
"Learned senior counsel, at the outset has raised objection about the maintainability of this appeal on the ground that the appeal has been filed against the interlocutory order dated 21.04.2008 passed in Writ Petition No. 2260/2008, which is pending. Learned counsel has invited attention to the proviso to Section 2 of the Madhya Pradesh Uchcha Nyayaolaya (Khand Nyapith Ko Appeal) Adhiniyam, 2005, which does not provide an appeal against an interlocutory order or an order passed under Article 227 of the Constitution of India, in exercise of the power of superintendence. Learned counsel for the appellants, however, maintains that it is the substance that has to be taken into consideration in construing whether it is an interlocutory order or a final order. According to the learned counsel for the appellants, since his claim for stay as regards recovery of the amount borrowed by the principal debtor has been finally declined on account of the same having been vacated by the impugned order the appeal would lie under Section 2 of the Act aforesaid, notwithstanding that the petition in which the said order has been passed, is still pending.
Be that as it may, facts reveal that the liability of the appellants has mounted up in his cash credit account to rupees two crore two lakh inclusive of interest, which has not been discharged by the appellants despite sufficient opportunity having been granted by the learned single Judge. Today also, the appellant is not willing to deposit any substantial amount to indicate his bona fide for time being granted to enable him to arrange funds and to discharge/liquidate the said liability. Learned counsel Mr. Anand Pathak,
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However, submits that given the time, the appellants will generate the funds from the property in their hands and pay the amount. He has also stated that apart from the property which has been attached under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the property worth four crores has been mortgaged to the Bank and, therefore, the amount advanced by the Bank is fully secured.
In view of the willingness of the appellants to discharge their liability is directed that the appellants shall deposit with the bank a sum Rs 10,00,000/- (ten lakh) within seven days from today and remain amount within three weeks thereafter. In the event, the appellant to discharge the liability and liquidate the amount of loan within period aforesaid, the Bank shall be free to proceed in accordance with the law to realize the amount outstanding.
With the time granted to the appellants, as aforesaid, this appeal is disposed of.
C.C. to both the parties.
13. The appellants of the writ appeal being dissatisfied with the order dated 15.5.2008 passed in writ appeal, challenged the same by filing SLP No.24129/2008, which was withdrawn on 10.11.2008 . Order dated 10.11.2008 reads as under :-
"The special leave petition is dismissed as withdrawn"
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14. The petitioner No.1 with his wife petitioner No.5 and his other family members, who were petitioners in the earlier writ petitions approached the High court regarding the same matter, but they neither deposit outstanding amount nor complied the order passed by this court in the respective writ petitions.
15. On 15.12.2008, the petitioner No.1 presented another Writ Petition No.7643/2008, with the intention to prolong the recovery proceedings as he had no knowledge regarding the sold property and finally prayed for withdrawal of the petition with liberty to file afresh petition, on the same cause of action. Order dated 17.12.2008 (Annexure P/11) reads as under :-
"On a specific query being put by the court to the learned counsel for the petitioner as to whether the property in question, has already been sold by the respondent - bank or not, learned counsel for the petitioner, on instructions from the petitioner, who is present in the court, states that the property in question, has since been sold by the respondent - bank, but details of the sale
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are not know to the petitioner.
In these circumstances, learned counsel for the petitioner states that the present petition may be permitted to be withdrawn, with liberty to the petitioner to file a fresh petition on the same cause of action, by impleading all the necessary parties, and by raising all appropriate challenges.
Dismissed as withdrawn with liberty as claimed.
C.c as per rules."
16. On 7.1.2009, petitioner No.1 again presented W.P.No.134/2009, which was dismissed on 15.1.2009 with the liberty to approach the DRT.
17. On 16.1.2009, the respondent No.1 bank ordered an auction - notice to auction the second secured property situated at 15/4, Chotta Sarafa, Indore, fixing auction sale dated 18.2.2009. On 29.1.2009, the Securitization Application No.15/2009, was filed before DRT, against the bank. The learned presiding officer by order dated 15.10.2012, dismissed the securitisation application by holding that the order passed by the writ court and writ appeals were not complied with and the petitioners had not disputed the
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amount as ordered on 28.1.2008, 10.2.2008 and 15.5.2008, respectively. No illegality was committed by the bank in pursuing the recovery proceeding against the borrowers and in view of the law laid down by the Apex Court in the case of M/s. Prestige Light Ltd V/s. State Bank of India, reported as AIR 2007 SCW 5350, the DRT found that the Securitisation Appeal No.15/2009 is barred by time as well as of devoid of merits and, therefore, dismissed the same, with cost.
18. The order passed by the DRT in Securitisation Appeal No.15/2009 was challenged by the writ petitioners by filing appeal under Section 18 of the Securitization Act, 2002, before the Debts Recovery Appellate Tribunal, Allahabad. The tribunal was of the opinion that the securitisation application, so preferred by the appellants is barred by time and is not maintainable. The tribunal also held that there was an opportunity available to the petitioners to have offered better and higher price then Rs.155.00 lacs, which was received by the bank through the sale of
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the property, but the said opportunity was not availed by the petitioners and no perspective buyer was produced before the bank who was ready to purchase the property for better and higher price then the price received by the bank from the respondents No.4 and
5. The tribunal has also taken a note of the order passed in W.P.No.2260 of 2008 and held that in the said writ petition, the petitioners were directed to deposit the amount but the amount as such was not paid by the writ petitioners under the circumstances, whole conduct of the petitioners only seems to create obstacles in the recovery and were not interested to repay the outstanding and dismissed the securitisation appeal on 15.10.2012. The learned appellate tribunal after appreciating the reasoning assigned by the tribunal so also the arguments advanced by the writ petitioners, dismissed the appeal on 10.1.2013 by passing the following order :-
"2. The relevant facts for adjudication of the present case are that the respondent no. 3 before the Tribunal was the borrower and the present
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appellants were the guarantors/mortgagors. Since there was default in payment of the dues o9f the Bank, therefore, the Bank issued a notice under Section 13(2) of the SARFAESI Act, 2002 dated 02.02.2007 for payment of the dues was served on the borrowers/guarantors. The dues were not paid therefore, the Bank took the possession of the property by taking recourse to Section 13(40 of the SARFAESI ACT, 2002 and the possession of the property was taken on 26.06.2007. The same was published on 01.08.2007. Ultimately, the property was put to auction. Earlier auction failed, therefore, the Bank decided to sell the property through private treaty, A letter was written by the Bank to the borrower vide its letter dated 28.11.2008, wherein it was intimated that the attempts were made to sell the property in auction but the property could not be sold, therefore, it has been decided to sell the property through private treaty for a sum of Rs. 155.00 lacs. The letter also says that the prospective buyer is available to the Bank. Ultimately, the property was sold on 26.11.2008 by the Bank to the respondents nos. 4 & 5 for a sum of Rs. 155.00 lacs.
3. The appellants filed a writ petition before the Hon'ble High Court of Madhya Pradesh, Jabalpur, Indore Bench, Indore in year 2009, which was registered as Writ Petition No. 134/2009. The said writ petition was dismissed by the Hon'ble High Court by its order dated 15.01.2009 on the ground that since the petitioner has an effective alternative remedy of approaching the Debt Recovery Tribunal with the various pleas raised in the petition, therefore, the present petition has to be dismissed. However, at the end the Hon'ble High Court further directed that
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said writ petition is disposed of and the petitioner is relegated to seek its remedies, in accordance with law before the Debt Recovery Tribunal.
4. The appellants preferred the securitization application under Section 17 of the SARFAESI Act, 2002 by filing the same on 29.01.2009 before the Tribunal. The limitation under Section 17 of the Act is prescribed of 45 days for the purpose of filing the securitization application, but the securitization application was preferred by the appellants before the Tribunal on 29.01.2009 challenging the sale of the property through private treaty, which was done on 26.11.2008.
5. The Tribuanl was of the opinion that the securitization application so preferred by the appellants is barred by time and is not maintainable. The Tribunal also held that in the present case, there was an opportunity available to the appellants to have offered better or higher price than Rs. 155.00 lacs, which received by the Bank through the sale of the said property, but the said opportunity was not availed of by the appellants and no prospective buyer was produced before the Bank who was ready to purchase the property for better and higher price than the price received by the Bank from the respondents nos. 4 & 5.
6. This is to be seen that in the present case, the Bank vide its letter dated 28.11.2008 also intimated to the appellants that the property in question has been sold through private treaty for a sum of Rs. 155.00 lacs on 26.11.2008. Thereafter, the Bank vide its letter dated 22.12.2008 has further intimated to the appellants that the property in question has been sold to the respondents nos. 4 & 5 for a sum of Rs. 155.00 lacs. This was a letter written by the Bank to the appellants in reply to
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the letter of the appellants dated 17.12.2008.
7. In view of the aforesaid, this is clear that there were numerous opportunities available to the appellants and the Bank gave sufficient intimation to the appellants that the property in question has been decided to be sold through private treaty for a sum of Rs. 155.00 lacs. In spite of such opportunity, the appellants failed to produced any prospective buyer, who was ready to purchase the property for higher price than the price received by the bank by the sale of the property through private treaty.
8. It is submitted on behalf of the appellants that in the present case before selling the property through private treaty the appellants were not given the opportunity to settle the terms for selling the property through private treaty in terms to Rule 8(8) of the Security Interest (Enforcement) Rules, 2002.
9. In this reference, this is to be seen that when the Bank vide its letter dated 28.08.2008 intimated to the appellants that the decision is taken to sell the property through private treaty for a sum of Rs. 155.00 lacs, then there was an intimation to the appellants and there was also an opportunity to the appellants to have offered the terms for the sale of the property through private treaty. Moreso, after when the property was sold on 26.11.2008 through private treaty to the respondents nos. 4 & 5, then it was further opportunity available nos. 4 & 5, then it was further opportunity available to the appellants to have offered better price for the sale of the said property by producing the prospective buyer but the appellants neither offered the terms nor even produced the prospective buyer, who was ready to purchase the property for
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higher amount. Under the circumstances, the grievance so
submitted by the appellants that since the value of the property was much higher, therefore, the sale by the bank cannot be accepted.
10. During the pendency of the application before the Tribunal, the appellants did not not produced any prospective buyer, who could have offered a better or higher price than the price received by the bank of Rs. 155.00 lacs by sale of the property to the respondents nos. 4 & 5.
11. The Tribunal has also taken a note of the order passed by the Hon'ble High Court in Writ Petition No. 2260/2008 and the Tribunal has held that in the said writ petition the appellants were directed to deposit the amount, but the amount as such was not deposited by the appellants. Under the circumstances, whole conduct of the appellants only seems to create obstacle in the recovery and were not at all interested to repay the dues. Since the property has already been sold in the auction and the sale certificate has already been issued in favour of the respondents nos. 4 & 5, therefore, after such sale particularly when the appellants had not been able to produce any prospective buyer, who was prepared to purchase the property for a higher and better price than Rs. 155.00 lacs for which the property was sold, the grievances so raised are not the real grievances, but the grievances are only to prolong the proceedings of recovery.
12. At the end this is to be seen that this Tribunal by passing the order on 05.12.2012 directed the parties on the question of non substitution of the deceased respondent no. 5-Smt. Daya Pagarani. Learned counsel for the appellants submitted that an application for substitution was moved, but no
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order was passed by the Tribunal allowing the said application. However, in the present case, the said technicality may not come in way for deciding the case because there were two purchasers of the property i.e. respondent no. 4, who is the husband of the respondent no. 5. Since one owner continues in the proceeding, therefore, it is not the case that the whole application could have been dismissed because one co-purchaser had already been continuing in the proceedings being a defendant.
13. Under the circumstances, there is no substance in the present appeal and the order passed by the Tribunal is appropriate. Accordingly, the appeal strands dismissed.
14. The amount so deposited by the appellants in the present appeal be paid to the Bank as still some amount is to be recovered.
19. The Securitisation Act is a special Act and there is no provision for condonation of delay. Even this court in exercise of its extra-ordinary jurisdiction under Article 227, cannot direct appellate authority to condone the delay beyond maximum period prescribed by law. If we go through the orders dated 15.10.2012 and 10.1.2013, the learned authorities have decided the matter on merits also.
20. The petitioner No.5 - Jagdish Rathi, is prime trustee of the Jagdish Rathi Family Trust. The
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respondent No.1 is the Karta of Jagish Prahlad Rathi HUF, both are husband and wife. They had under the joint signature executed the sale agreement dated 13.3.2008 with the perspective purchaser - Dinesh Kumar Thakuriya, mentioning therein that in HUF Mr. Jagdish Rathi and Smt. Rita Rathi are the main Karta of the HUF. The petitioner No.5 - Rita Rathi, has further given the undertaking dated 13.8.2008 for repayment signed by (Annexure R/7) and further undertaking dated 16.4.2007 for repayment of the loan amount (Annexure P/6).
21. The respondent No.3 - Swastik Distributor is proprietorship concerned. Proprietor P.N. Rathi, HUF, through Karta Shri Umesh Rathi. On 20.6.2007, an undertaking was given by the petitioner No.5 and the respondent No.3, for repayment, signed by the petitioner No.5 Rita Rathi, which is at page 149 of the bank's reply dated 20.6.2007. The petitioners No.1 and 2 acted on the basis of the notice received by them and gave undertaking to the bank. This shows that
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they have waved their right of grievance of non service of notice. All the petitioners were party to the SLP No.24129/2008, which was dismissed as withdrawn on 10.11.2008.
22. It is submitted by the learned Senior counsel for the petitioners that no notice under Section 13 (2) of Securitization Act was served. As per Rule 3 (1) and (4) Securitization Act, 2002, notice must be served on each and every borrower and guarantor. The service of notice on every borrower and guarantor is mandatory under the Rule and their family members.
23. The learned Senior counsel for the petitioners has submitted that the whole action taken by the bank was in-violation of the provisions of law and void ab initio as no notice under Section 13(2) has been served on the petitioners and no notice under Section 13(4) under Rule 8 (6) and under Rule 8 (8) has been issued and served to the petitioners by the bank.
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24. In respect of W.P.No.2260/2008, he submits that the said writ petition was preferred by the borrowers, and petitioners were not aware of this petition as well as action taken by the bank and hence, the order passed in W.P.No.2260/2008, was not binding in the present petition. He also submitted that in W.P. No.10931/2007, W.P. No.867/2008, MCC No.248/2008, W.A.No.338/2008, W.P.No.2260/2008, Contempt Petition No.403/2008 and in W.P.No.12043/2008, petitioners (guarantors) were not a party, therefore, the orders passed therein are not binding upon the petitioners. In respect of notice dated 2.2.2007, the acknowledgments, which are at page No.124 to 125, he submits that the same has not been served to the present petitioners and was signed by Vibhuti Rathi, Vina Rathi and Rita Rathi on their behalf and not by the present petitioners. To support the aforesaid contention, he has drawn our attention to the decision of the Apex court in the case of Mardia Chemicals Ltd. etc. V/s. Union of India,
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reported as AIR 2004 SC 2371, Mathew Verghese V/s. M. Amritha Kumar & Others reported as 2014 (5) SCC 610. His second contention is that after auction notice issued by the bank, the auction was held within ten days, ie., 17.8.2010 whereas, it should be within 30 days as per Rule 8(6) read with Rule 9 (1) of 2002 Rules.
25. In respect of auction notice dated 17.8.2007, the borrowers filed a W.P.No.10931/2007. On 16.8.2007, the stay was granted and thereafter writ petition was dismissed as withdrawn on 1.10.2007. On 9.10.2007, second auction notice was issued and the date of auction was 15.10.2007. The borrower challenged the auction notice dated 15.10.2007 by filing S.A.No.45/2007 and on 12.10.2007, DRT stayed the auction and thereafter on 11.12.2007, stay was vacated by the DRT with a direction to issue a fresh notice under Rule 8(5) of 2000 Rules. On 25.12.2007 a fresh notice was issued and on 28.1.2008, auction was held. The borrower
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again challenged the same by filing W.P.No.867/2008 on which stay was granted. On 20.3.2008 again fresh notice was issued and auction notice was issued on 28.3.2008.
26. The fifth notice was issued on 23.2.2008 and the auction in respect of 21, Model Town, Indore, was held on 24.4.2008. On 24.5.2008, the bank issued a letter to deposit 75% amount within 15 days. On 24.7.2008, a fresh notice for auction was issued and on 6.8.2008, auction was held. The highest bid of respondent No.4 of Rs.1.55 Crores was accepted for plot No.21, Model Town, Indore. On 28.8.2008, notice by the bank to the borrower about the bid or to pay the amount on 26.8.2011 was issued. The bid of the respondent Nos. 4 and 5 was finalised in favour of the respondents No.4 and 5. W.P.No.7643/2008, was filed by the petitioner No.1, the same was dismissed as withdrawn on 17.12.2008. W.P. No.134/2009, was dismissed on 15.1.2009. S.A.No.15/2009, was dismissed as time barred by the DRT on 15.12.2010
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vide Annexure P/26.
27. On 12.3.2009, sale certificate was issued in favour of the respondents No.3 and 4 in respect of plot No.21, Model Town, Indore. The appeal was dismissed on 10.1.2013.
28. Learned Senior counsel has drawn our attention to the decision in the case of Ram Kishan Jain & Others V/s. State of U.P. & Others reported as 2012 (11) SCC 511 and submits that whole proceedings of auctioning the property of plot No.21, Model Town, Indore, is contrary to provisions of Securitization Act and Rules framed therein.
29. In respect of the property of House No.15/4, Chhota Sarafa, Indore, the auction notice, proper valuation of the market price was not done to fetch maximum price. The market price fixed by the bank of the aforesaid property was Rs.1.60 crores, ie., less then the Collector's guideline. He has drawn our attention at page No.309, valuation report and certificate dated 1.1.2008 and as per the aforesaid
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valuation of the property is Rs.5.3 Crores. He submitted that the valuation of the property has been done by the approved valuer under Rule 8 (5) of 2002 Rules. In 2013, the valuation done by the bank in 2011 was meager only Rs.1.60 Crore, the bank has not properly valued the price of the property to fetch maximum price. To support the aforesaid, he has drawn our attention to the Apex court judgment in the case of J. Rajiv Subramaniyan & Anr. V/s. Pandiyas & Ors., reported as 2014 (5) SCC 651 and in the case of M. Rajendran V/s. A.O., Corporation Bank, reported as AIR 2012 Mad. 21 and Ram Kishan Jain & Others V/s. State of U.P. Others (supra). As per record the auction was held on 15.2.2013, highest offer was made by the intervener of Rs.1,61,11,000/- and a sum of Rs.40.29 lacs was deposited and rest of the 75% amount was deposited on 9.7.2015.
30. The contention of the learned counsel for the intervener that the stay granted on 14.2.2013,
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was vacated on 17.6.2015. The bank immediately, issued letter on 22.6.2015 to deposit the amount on 9.7.2015. The 75% of the amount was deposited. Thereafter on 24.7.2015, a sale certificate was issued.
31. The stand of the bank that notice was duly served to the petitioners on 2.2.2017 to Veena Rathi and Rita Rathi, who are family members of the guarantors. On 13.2.2008, the petitioners No.1 and 2 executed agreement vide Annexure R/14, dated 16.3.2007, the petitioners agreed to settled their dispute. On 16.3.2007, the proposal of the borrowers was made to them. There was no non-compliance of any of the provisions of Securitization Act and Rules made therein.
32. Shri Ajay Bagadiya, learned counsel for the intervener / auction purchaser has submitted that immediately after vacating the stay order on 17.6.2015, letter was issued by the bank on 26.6.2015 to deposit 75% of the amount. On 9.7.2015, the amount was deposited subject to confirmation by the
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secured creditor. Thereafter, sale certificate was issued on 18.1.2016, sale deed was executed n favour of the intervener. He has also drawn our attention to the decision of this court Central Bank of India V/s. C.L. Vimla & Others, reported as 2016 (1) MPLJ 101 and C.C. Alavi Haji V/s. Talatetty Mohmmed & Anr. reported as 2007 (6) SCC 555 and submitted that notices were duly served to the present petitioners who are none other then close relatives of the borrowers.
33. Shri Piyush Mathur, learned Senior counsel who is appearing on behalf of the respondents No.4 and 5, who have purchased plot No.21, Model Town, Indore, has submitted that petitioner No.3 - Umesh Rathi and respondent No.3 are one and the same persons. Annexure R/13, letter dated 16.4.2007, written by Umesh Rathi and Rita Rathi reads as under :-
"The first property is situated at 15, chhota Sarafa, Indore is an old house constructed in 1930s and being occupied by
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approx, 60 tenants for more than 25 to 75 years; Also one part of the building was damaged in the year 2005; but still in the possession of the tenants which in turn highly depreciated the market value of the property from that of distressed value given by the Bank approved valuer earlier in year 2002.
In the circumstances of bank taking the possession of the properties for auction of the same, the price of property may get further depreciated upto 60% of present market value, seeing to boundation of seller to sell the properties as early as possible. Therefore, it will be problem for bank to dispose off the same at good price, and recover the total outstanding debt in full. We are not having any other source for repayment of bank's dues; and we feel that we may devote more time and efforts to dissolve the same at the best price under supervision of bank and shall repay the entire dues of the bank. We are also trying to get good price of the plot of land situated at the Model Town colony, Indore; the second mortgaged property.
Hope you will extend some time for the same and please do not initiate any action in the interest of bank, so that we are trying our level best to liquidate properties and hope to make the full repayment of the Bank Dues. We are confident that the bank will not be at any loss including further interest, and will be able to get the repayment of full dues including further interest, in giving us time for disposing the properties in normal way. Thanking You, Sincerely yours,
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[Umesh Rathi] [Rita Rathi]"
34. Annexure R/14, is the letter written by the petitioners, which reads as under :-
"It is therefore, we propose to settle the all accounts in one time. We have mortgaged two family owned properties with the bank. One is House at 15, Chhota Sarafa, Indore which have approx 60 tenants at present, and hence it seems difficult to dispose it off at a good price. Realizable Value of the property goes down due the tenant occupancy. Chances for prospective buyer who can pay immediately for the property with 60 tenants seems difficult. Another security a plot of land at Model Town Colony, RTO Road, Indore.
Hence we proposed to dispose both the properties at the best price and settle the account. As per present market scenario both the property can fetch approx 100 to 110 lacs and we shall settle the all account at the same level.
We request you to give us green signal for the same so that we can start searching for buyer with the guidance of bank officials and can get optimum value of the properties and settle the account within First Quarter of the next financial year."
35. Annexure R/15, dated 20.3.2007 of request letter made by the petitioner No.3 - Umesh Rathi
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wherein, he has sought one more opportunity to repay the amount. On 31.10.2017, Rita Rathi, again sought time for repayment. Letter dated 31.10.2007 Annexure R/6 reads as under :-
lanfHkZr fo"k;karxZr fuosnu gS fd fo"k;kafdr [kkrksa ds iquZHkqxrku ds lEcU/k esa fu;fey :i ls ekfld fd'rsa pqdkus dh gekjh LFkk;h O;oLFkk 30-07-2007 rd gksus dh iwjh vk'kk gS] ;fn ,slh gekjh O;oLFkk ugha gks ikrh gS rks ge vfuok;Z :i ls 15-08-2007 rd vkids ikl Iyst j[kh gqbZ ;k vU; dksbZ izkiVhZ cSapdj mDr [kkrksa dk iquZHkqxrku leLr C;kt o ns; jkf'k lfgr dj nsaxsA vr% d`i;k fuosnu gS fd] mi;qZDrkuqlkj gesa voljh nsus dh d`ik djsasA volj nsus ij vkidh cSad dks 1 #- dh Hkh tksf[ke ugha jgsxh D;ksafd orZeku esa cSad ds ikl IysTM~ nksuksa izkiVhZ dk orZeku ewY; #- 3 djksM+ ls vf/kd gSA
36. Due to stay order dated 4.7.2013, no sale certificate was issued in favour of the intervener. In letter dated 15.2.2013, the bank very categorically stated that in terms of stay order issued on 14.2.2013, the bank shall not issue sale certificate with regard to the property till further orders. The application for vacating stay filed by the bank on 14.5.2014, was allowed and thereafter bank issued the sale certifate and sale deed was executed in favour of the intervener.
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37. All the petitioners were party to the proceedings before Hon'ble the Supreme Court in SLP 24129 of 2008, the petitioner No.1 - Jagdish Rathi, who is husband of petitioner No.5 - Geeta Rathi, was appellant No.7, petitioner No.2 - Shridhar Rathi was appellant No.6, petitioner No.3 - Umesh Rathi, was appellant No.2, petitioner No.4 - Vineet Rathi was appellant No.6 and petitioner No.5 - Reeta Rathi was appellant No.7 in SLP.
38. We have further noted that the sale of the property in question was confirmed in favour of the auction purchaser and sale certificate was also issued in their favour. It is also not in dispute that auction purchaser was put in possession of the property and is still in possession of the property since the sale certificate was issued and registration was made in their favour. Therefore, in our opinion, the equity and conscience also has to play a role in the matter in question on the given facts and after considering the conduct of the petitioners and respondent No.3 in the
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matter. In these circumstances, we feel that it would not be proper for us at this stage, to set aside the sale. We further noticed that the borrower and guarantors were not prepared to pay back the amount to the bank and did not choose to defend themselves properly. Their conduct also cannot be overlooked.
39. The price of immovable property keep on varying depending upon market conditions and availability of the buyer. There is no illegality or irregularity established against the conduct of auction and once it is found that the offer made by the respondents No.4, 5 and intervener was a fair offer in competent bid conducted fairly and offer has been accepted by the court and the sale confirmed by it, it would not be proper to undermine the value of such auction / sale. SARFAESI Act is intended to facilitate easy and fast recovery of loans advanced by banks and financial institutions. In the present case, inspite of number of opportunities granted to the borrowers and petitioners to repay the amount and intimation was also given to them for sale of the property through private
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treaty. An opportunity was also available to the petitioners to have offer better price in the sale of property by producing the perspective buyers, but the petitioners neither offer the terms nor even produced the perspective buyer who was ready to purchase the property for higher amount. All these questions were considered by the learned DRT as well as by the appellate authority, ie., DRAT. There is no reason to disturb the concurrent findings arrived at by the DRAT as to irregularities committed in holding the said auction and setting aside of the sale.
40. Under Article 227 of the Constitution, scope is very limited. The notices were served to them. After coming to know about the action, they had made offer and representations to the bank for repayment of loan amount. They had knowledge about the proceedings. From the facts of event, it appears that the petitioners want to delay the proceedings and, therefore, they are raiding this paused in one after another by filing writ petitions against the interim and final orders securitization applications, without complying the
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undertaking given by them as narrated herein above. All the writ petitions were dismissed. Petitioners No.1 to 5 were party before the Apex Court in SLP No.24129/2008 and, therefore, it cannot be said that this is their first writ petition against the order passed in Securitisation Application No.15/2009, which was affirmed by the DRT on 10.1.2013. An opportunity was granted to the borrowers and guarantors to repay the amount and sale the property through private treaty, but inspite of undertaking given by them, they failed to do it nor they deposited the amount in compliance to interim order passed by the writ court and thus, we are of the view that the action of the bank is just and proper. The writ petition filed by the petitioners has no merit and is, accordingly, dismissed with cost of Rs.25,000/- to each set of the respondents, ie., Bank respondents No.4 and 5 as well as intervener.
41. In view of the detailed order passed in W.P.No.1361/2013 today, the review petition filed against the interim order also stands dismissed.
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(P.K. JAISWAL) (VIRENDER SINGH)
JUDGE JUDGE
SS/-