Punjab-Haryana High Court
Bank Of India vs The Debts Recovery Appellate Tribunal ... on 23 August, 2012
Author: G.S. Sandhawalia
Bench: Ajay Kumar Mittal, G.S. Sandhawalia
CWP No. 10175 of 2010 1
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
CWP No. 10175 of 2010
Date of Decision:- August 23, 2012
Bank of India ..............PETITIONER(S)
vs.
The Debts Recovery Appellate Tribunal and others
...........RESPONDENT(S)
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
HON'BLE MR. JUSTICE G.S. SANDHAWALIA
Present:- Mr. G.S. Anand, Advocate,
for the petitioner.
Mr. Rohit Suri, Advocate,
for respondent no. 4.
Mr. R.S. Bhatia, Advocate,
for respondent no. 5.
G.S. SANDHAWALIA, J.
1. The present writ petition has been filed under Articles 226 and 227 of the Constitution of India for issuance of a writ in the nature of certiorari for quashing orders dated 11.03.2009 passed by Debt Recovery Tribunal (hereinafter referred to as 'Tribunal') setting aside the order of the Recovery Officer. The prayer of the petitioner is also for quashing order dated 09.03.2010 (Annexure P-7) passed by the Debt Recovery Appellate Tribunal (hereinafter referred to as 'DRAT') dismissing the appeal and also the order dated 10.05.2010 (Annexure P-8) passed in review petition.
2. In this writ petition filed by the bank, from the facts, it transpires that the civil suit for recovery of debts was instituted by the CWP No. 10175 of 2010 2 petitioner-bank against respondent no. 4-M/s. Kundan Rice & General Mills which was decreed by the Tribunal for a sum of `41,01,522/- alongwith costs and future interest from the date of filing of the suit till its realization at 18.25% p.a. with quarterly rests with further entitlement to recover the said amount by way of sale of hypothecated goods and mortgaged immovable properties vide judgment and decree dated 24.10.1996. The appeal filed by the judgment debtor was dismissed on 11.12.2007. In execution, it was directed that the auction of the attached property was to be conducted and the reserve price was fixed at `3.90 crores, vide order dated 03.03.2008. Accordingly, the public auction was held on 21.04.2008 and the highest bid received was of `6.5 crores from respondent no. 5-M/s. Best Hotels & Resorts Pvt. Ltd. Prior to the date of auction on 11.04.2008, the objections filed by the judgment debtor were dismissed by the Recovery Officer on the ground that they had been filed to delay the recovery proceedings.
3. On 02.07.2008, the Recovery Officer dismissed the objections filed against the conducting of the action by holding that the whole debt of the bank could not be recovered unless both lots of the properties were sold together and issued sale certificate in favour of the auction purchaser. A further direction was issued that the possession should be handed over to sale certificate holder through the bank or through the Recovery Officer within seven days so that the amount received in auction could be allowed to be appropriated by the bank and the surplus amount transferred to the judgment debtor. The judgment debtor filed CWP No. 11117 of 2008 challenging the order of the Appellate Tribunal dated 11.12.2007, which was dismissed by this Court on 04.07.2008 on the ground that on an earlier CWP No. 10175 of 2010 3 occasion, the judgment debtor had concealed an order passed by this court dated 21.12.2001 to get an interim order from the Appellate Tribunal on 24.12.2001. Thereafter, on 11.03.2009, the Tribunal set aside the auction holding it to be illegal as VCD was produced showing that the auction had not been conducted by the auctioneer appointed by the Tribunal but by the officer of the bank, which was without any specific orders of the Recovery Officer. On 30.03.2009, the Recovery Officer, on the application of the auction purchaser, released the amount of the sale proceeds to the auction purchaser with the stipulation that in case the appeal of the bank was allowed, the auction purchaser would deposit the entire sale proceeds back. It was further directed that the amount of `3.7 crores, which had been released in favour of the bank on 27.07.2008, be released in favour of the auction purchaser alongwith interest @ 8.50% p.a. Similarly, the poundage fee of `6,30,010/- deposited by the Registrar was also directed to be released to the auction purchaser. The appeal filed by the bank before the DRAT on 09.03.2010 against the order dated 11.03.2009 was disposed of with the direction that since the auction purchaser was no more interested in the property, the sale should be treated as cancelled. It was observed that the Recovery Officer should have sought the order of the Tribunal before returning the extra money to the borrower. The plea that the adjacent land was sold to another buyer for `10 crores was also taken into consideration by the DRAT. Accordingly, the auction sale was cancelled and the auction purchaser was required to pay the entire expenses to the Recovery Officer which was to be deducted from the money to be returned to the auction purchaser after a period of four months. The auction purchaser was not to get any interest on the said amount during the period of four months. The CWP No. 10175 of 2010 4 bank was at liberty to re-auction the property in accordance with law as the borrower had displayed his inability to pay off the loan. The review application filed by the bank was decided on 10.05.2010 whereby, it was directed that the auction purchaser would get simple interest on the amount for the period of dispute till 09.03.2010 i.e. the date the appeal was disposed of.
4. In the written statement filed by respondent no. 4 on behalf of the judgment debtor, it was pleaded that the valuation was wrongly fixed at `3.9 crores whereas, the value of the property was `10 crores and the property could be divided and sold off in parts as it was a large chunk of property measuring 540 marlas (3 acres 3 kanals) situated on the G.T. Road, Village Duneke, Moga. It was further pleaded that the auction was to be conducted by the Court Auctioneer and the officers of the bank had actively participated as depicted in the VCD and that the Chief Manager (Law) of the respondent-bank had favoured the auction purchaser. It was further submitted that by selling 300 marlas out of the total 540 marlas, the bank could easily recover the debt and the remaining amount could be paid to the respondent. It has been further pleaded that the amount over and above the amount due to the bank, should have been paid to the borrowers, rather than being refunded to the auction purchaser.
5. Counsel for the bank has vehemently submitted that the bank had got a decree on 24.10.1996 which was upheld in appeal. The judgment debtor has resorted to various means by initiating litigation in various Courts and also filing writ petitions in the High Court of Rajasthan and this Court, while also pursuing the appeal before the DRAT. Reference was also made to the order dated 04.07.2008 to show that this Court had adversely CWP No. 10175 of 2010 5 commented upon the conduct of the judgment debtor.
6. On the other hand, counsel for respondent no. 5 pointed out that though it had participated in the auction on 21.04.2008, it had not been able to get possession of the property in dispute. Accordingly, it had filed the application for withdrawal of the amount which was ordered by the Recovery Officer on 30.03.2009 since the DRT had set aside the sale on the ground of illegality vide order dated 11.03.2009.
7. We have perused the paper book and heard the counsel for the parties. We are of the opinion that the present order of the DRT is not liable to be interfered with. The Tribunal, vide order dated 11.03.2009, had noticed while going through the video recording of the auction proceedings, that the bank officials had taken active part in the auction proceedings without any authority. The reserve price of the property was fixed at `3.90 crores for a huge chunk of land of 3 acres 3 kanals whereas admittedly, the highest bid received was of `6.3 crores. The valuation was not rightly conducted and it is the case of the judgment debtor that the value of the land was more than `10 crores at that point of time. The whole property had been put to auction whereas the amount to be recovered was much less since the suit had been decreed for `41,01,522. The objection of the bank that earlier also CWP No. 11117 of 2008 had been filed and findings were recorded against the judgment debtor, is also of no consequence since in the present case, the auction purchaser himself has opted to get his money refunded, once the sale had been set aside on the ground of illegality. The Recovery Officer had directed the amount to be paid to the auction purchaser vide order dated 30.03.2009. A perusal of the auction proceedings which were conducted by the Court Auctioneer also shows that CWP No. 10175 of 2010 6 the bank officers which includes the Chief Manager, Manager and Chief Manager (Law) were present on the spot. This fact has been further verified by the DRT while seeing the VCD.
8. Since liberty has been granted to the bank to re-auction the property in accordance with law and it has been directed that the auction purchaser will pay the entire expenses incurred on the said auction, no fault can be found with the orders of the DRAT. The bank has not been prejudiced in any manner by the impugned orders and as observed earlier that in fact the property of the borrower was sold at a meagre price as the reserve price was only fixed at `3.90 crores whereas the highest bid received was much above amounting to `6.30 crores which justifies the plea of the judgment debtor that the land measuring 3 acres 3 kanals situated at G.T. Road was highly under valued.
9. Resultantly, the present writ petition is dismissed and the orders of the DRT and DRAT below are upheld.
(G.S. Sandhawalia)
Judge
23.08.2012 (Ajay Kumar Mittal)
shivani Judge