Kerala High Court
K.Krishnakumar vs The South Indian Bank Ltd on 16 July, 2009
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
FRIDAY, THE 9TH DAY OF SEPTEMBER 2016/18TH BHADRA, 1938
OP (DRT).No. 48 of 2014 (O)
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PETITIONER(S):
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1. K.KRISHNAKUMAR
S/O.A.KUMARESAN, PROPRIETOR, M/S.KRISHNA ENTERPRISES,
CHOORAKATTUPALAYAM, TC 38/525,
CHENTHITTA, THIRUVANANTHAPURAM.
2. A.KUMARESAN, AGED 77 YEARS,
S/O.APPAVU PILLAI, TC 38/525,
CHENTHITTA, THIRUVANANTHAPURAM.
BY ADVS.SRI.MOHAN JACOB GEORGE
SMT.P.V.PARVATHI
SMT.REENA THOMAS
RESPONDENT(S):
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1. THE SOUTH INDIAN BANK LTD
REGD.OFFICE, THRISSUR, CHALAI BRANCH,
THIRUVANANTHAPURAM-695007.
2. SHAHAS.P.SHAHUL
S/O.P.M.SHAHUL HAMEED, PARAPPALLI HOUSE,
KURUVAMOOZHY P.O., KORATTY, ERUMELY,
KANJIRAPILLY, KOTTAYAM DISTRICT-686509.
3. RECOVERY OFFICER
DEBTS RECOVERY TRIBUNAL, ERNAKULAM-682036.
4. DEBTS RECOVERY TRIBUNAL
ERNAKULAM, REPRESENTED BY ITS REGISTRAR-682036.
R1 BY ADV. SRI.GEORGE VARGHESE,SC,SOUTH INDIAN BANK
R2 BY ADV. SRI.C.G.SUNIL
R2 BY ADV. SRI.SAJI MATHEW
R2 BY ADV. SRI.DENU JOSEPH
R3-R4 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
THIS OP (DEBT RECOVERY TRIBUNAL) HAVING BEEN FINALLY HEARD ON
27-07-2016, THE COURT ON 09/09/2016 DELIVERED THE FOLLOWING:
OP (DRT).No. 48 of 2014 (O)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT-P1: COPY OF THE PROCEEDINGS DATED 16.7.2009 OF RECOVERY OFFICER.
EXHIBIT-P2: COPY OF OBJECTIONS/STATEMENT FILED BY THE PETITIONERS
BEFORE THE RECOVERY OFFICER.
EXHIBIT-P3: COPY OF THE ORDER DATED 27.7.2009 PASSED BY THE RECOVERY
OFFICER.
EXHIBIT-P4: COPY OF THE INTERIM ORDER DATED 24.9.2009 PASSED BY THE DRT IN
I.A.NO.2017/2009 IN APPEAL NO.34/2009.
EXHIBIT-P5: COPY OF THE JUDGMENT DATED 18.06.2010 IN W.P.(C) NO.12196/2010.
EXHIBIT-P6: COPY OF THE JUDGMENT IN O.P.(DRT) NO.1853/2011.
EXHIBIT-P7: COPY OF THE FINAL ORDER DATED 02.08.2010 IN APPEAL NO.34/2009
PASSED BY THE DRT, ERNAKULAM.
EXHIBIT-P8: COPY OF THE ORDER DATED 05.03.2014 OF THE DRAT DISMISSING RA
11/2013.
EXHIBIT-P9: COPY OF THE FINAL ORDER IN SA 9/2008 OF THE DRT, ERNAKULAM.
RESPONDENT(S)' EXHIBITS NIL
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Rp
//True Copy//
P.S to Judge
A.M. SHAFFIQUE, J.
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O.P. (DRT) No. 48 of 2014
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Dated this, the 9th day of September, 2016
J U D G M E N T
This original petition is filed inter alia seeking the following reliefs:-
"A. Call for the records leading to Exts.P1-P8 and quash Exts.P3, P7 & P8.
B. Command the first respondent to allow the petitioners redeem the property by adjusting the amounts deposited by the petitioners during Ext.P8 proceedings.
C. Direct the DRT, Ernakulam to consider and dispose of Appeal Nos.30/2011 and 31/2011 pending before the said Tribunal within a time limit fixed by this Hon'ble Court and to direct the respondent No.3 to keep in abeyance all further proceedings in DRC No.2125 under OA No.148/2005 till disposal of this original petition."
Ext.P3 is the proceedings of the Recovery Officer attached to the Debts Recovery Tribunal, Ernakulam by which overruling the objection submitted by the petitioners, the Recovery Officer had fixed the date of sale after a period of two months. The OP(DRT) No.48/14 -:2:- objection raised by the certificate debtor was regarding the value of the property. It was contended that the property would fetch atleast `15 to 20 lakh per cent and sale of a portion of the property was enough to wipe out the debt due to the Bank. Recovery Officer held that the request for a fresh valuation of the property is only to delay the proceedings. It was also found that there is no scope for putting up a portion of the property for sale, as a residential building is situated in the entire area and there was proper publication for the conduct of sale. Ext.P7 is an order passed by the Debts Recovery Tribunal in an appeal filed by the petitioners against the order passed by the Recovery Officer invoking Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act'). The Tribunal after a detailed consideration of the factual issues involved in the matter did not interfere with the impugned order. However, the appeal was disposed of granting one more opportunity to the appellants to redeem the subject OP(DRT) No.48/14 -:3:- property. Petitioners were permitted to remit the balance amount along with upto date interest, costs and expenses together with a sum equal to 5% of the purchase money as penalty for payment to the auction purchaser. It was also found that if there is default in payment, it shall be open for the Recovery Officer to proceed with confirmation of sale. Such a direction had been issued as the property was sold during the pendency of the appeal. Ext.P8 is the appellate order passed by the Appellate Tribunal at Chennai. Petitioners challenged the order dated 2/8/2010 in Appeal No.34/2009 before the Appellate Tribunal. The Tribunal dismissed the appeal without interfering with the orders passed by the Recovery Officer and the Debts Recovery Tribunal.
2. The petitioners subsequently filed separate appeals as Appeal Nos.30/2011 and 31/2011 challenging the sale and confirmation of the sale which are pending before the Tribunal. It is in the said background that this original OP(DRT) No.48/14 -:4:- petition had been filed inter alia reiterating the contentions urged before the Tribunal and the Appellate Tribunal.
3. The main contention urged by the petitioners is that there is procedural irregularity on the part of the Recovery Officer in publishing and conducting sale and thereafter confirming the sale. It is pointed out that there was a stay of confirmation of sale during the pendency of Appeal No.34/2009. Though the matter was finally heard on 2/8/2010, the dismissal of the appeal was known only from the entry noted in the A Diary note in the Debts Recovery Tribunal. Though the petitioners had applied for certified copy of the final order, the same was not obtained immediately. Petitioners place reliance on Ext.P9, an order passed in SA No.9/2008 wherein the Tribunal has deprecated the practice of the Bank in publishing sale on the basis of a valuation report obtained one year back. It is stated that the property was grossly undervalued and was sold at a price less than `4 lakhs per cent based on the reduced reserve OP(DRT) No.48/14 -:5:- price fixed by the Recovery Officer.
4. Counter affidavit is filed by the 2nd respondent, the auction purchaser. According to him, he had bid in the auction for `38,88,510/- on 29/9/2009. The entire amount had been deposited by him on 10/12/2009 within the prescribed period. Thereafter, the 3rd respondent had confirmed the sale by virtue of order dated 28/3/2011. He produced the stamp paper worth `3,46,500/- and certificate of sale dated 24/5/2011 was issued to him as per letter to the Sub Registrar's Office, Chalai, Trivandrum and accordingly appropriate entries had been made by the said Sub Registry Office. It is therefore submitted that the property belongs to the additional 3rd respondent. Thereafter, steps were taken for obtaining delivery of the property. Notice was issued to the petitioner. It is stated that when Appeal No.34/2009 was pending, respondents approached this Court by filing WP(C) No. 12196/2010 seeking a direction to expedite the matter, pursuant to OP(DRT) No.48/14 -:6:- which this Court directed the Debts Recovery Tribunal to dispose of the matter as per judgment dated 18/6/2010. The appeal was dismissed by the Tribunal. Still the Tribunal gave an opportunity to the petitioners to clear the liability and redeem the property. Though the petitioners were aware of the disposal of the appeal, they did not attempt to avail the opportunity to redeem the property, whereas, they preferred an appeal before the Appellate Tribunal, which came to be dismissed. It is further contended that there is no procedural irregularity in the matter of reducing reserve price from `44 lakhs to `38 lakhs. It is further contended that the Tribunal as well as the Appellate Tribunal have considered the respective contentions of the petitioners in the correct perspective and therefore there is no reason why this Court should set aside the sale.
5. A reply affidavit has been filed by the petitioners in which it is stated that the entry in the A Diary only shows that Appeal No.34/2009 was dismissed. An opportunity to OP(DRT) No.48/14 -:7:- deposit the amount and redeem the mortgage was not known until a certified copy was obtained. The confirmation of sale was deferred by the Recovery Officer since the certified copy was not received. However, sale was confirmed on 28/3/2011 stating that no amount was deposited in compliance with the order passed by the Debts Recovery Tribunal. It is stated that final order in the appeal was not received by any of the parties on 28/3/2011. It is further stated that the petitioners had deposited more amounts than the amount due under the decree before the Appellate Tribunal and therefore, it ought to have directed the petitioners to refund the auction amount to the purchaser. According to the petitioners, `5 lakhs was paid to the Bank during the pendency of the proceedings and a further amount of `11,41,310/- was also deposited before the Appellate Tribunal, Chennai on 13/12/2012. It is stated that the amount already deposited in Debts Recovery Appellate Tribunal was sufficient to compensate the auction OP(DRT) No.48/14 -:8:- purchaser as ordered by the Debts Recovery Tribunal in Ext.P7 order. Learned counsel for the petitioners places reliance upon the judgment of the Apex Court in Maganlal v. M/s Jaiswal Industries [(1989) 4 SCC 344] to contend for the proposition that mortgagee's right to redeem continues till confirmation of sale pursuant to a final decree. Similar proposition has been laid down in Kharaiti Lal v. Raminder Kaur and Others [(2000) 3 SCC 664] wherein it was held that when an appeal is pending against an order refusing to set aside the sale, the confirmation of sale as also the issuance of sale certificate would be in a nebulous state and consequently, it would be open to the judgment debtor to invoke the provisions of Order 34 Rule 5 CPC and make necessary deposits to save his property from being transferred to a third person in execution of the decree. Reference is also made to the judgment in U.Nilan v. Kannayyan [(1999) 8 SCC 511] which also laid down somewhat similar proposition.
OP(DRT) No.48/14 -:9:-
6. On the other hand, learned counsel for the respondents placed reliance upon the judgment in Madurambigai Ammal v. D.Somasundaram [(2005) 10 SCC 166] wherein it was held that once the sale deed was executed in favour of the auction purchaser and there was no stay of operation of the auction sale or execution of any sale deed, the right of redemption would be extinguished. Another judgment relied upon is V.K.Palaniappa Chettiar (dead) by L.Rs v. Ramasami Gounder and another [(2001) 4 SCC 413], wherein the Apex Court held that the judgment debtor has to make deposit of the amount due in Court on or before the day fixed or any time before confirmation of sale is made in pursuance of a final decree passed under sub rule (3) of Order 34 Rule 5. In another judgment Hukumchand v Baurilal (AIR 1968 SC 86), the Apex Court has held that there is no power under Order 34 Rule 5 to extend time and all that it does is to permit the mortgagor judgment debtor to deposit the amount before the confirmation of sale. OP(DRT) No.48/14 -:10:-
7. In a recent judgment of the Apex Court in Mathew Varghese v. M.Amritha Kumar [(2014) 5 SCC 610], it has been held that the mortgagor gets a right to redeem the mortgage before registration of the sale certificate.
8. Now coming to the facts of the present case, the main contention urged by the petitioners is regarding undervaluation. In Ext.P3 order passed by the Recovery officer, it was stated that objection regarding under valuation was without any basis as no material was produced to indicate that the reserve price was more than `44 lakhs which was fixed for the property. It is further observed that the auction in question had to be adjourned as many as 14 times and when it was found that the reserve price of `44 lakhs was on higher side and there was no prospective buyers, reserve price was reduced to `38 lakhs. It was also observed that there was proper publication of the sale. Though the petitioner filed Appeal No.34/2009 and sought for stay of sale, an interim order was passed OP(DRT) No.48/14 -:11:- deferring confirmation of sale alone as per order dated 24/9/2009. The sale was subsequently held and the additional respondent has purchased the property by quoting `38,88,510/- on 29/9/2009 and admittedly, he had deposited the entire amount before the Recovery Officer. Appeal No.34/2009 was disposed of on 2/8/2010 wherein having taken note of the contentions urged, the Tribunal justified the action of the Recovery Officer in reducing the reserve price. It was held that the alleged insufficiency of sale price is not a ground to vitiate the sale as there was no material to indicate that there was gross undervaluation. Further, it is observed that in an affidavit filed by the certificate debtor on 3/1/2007, it was mentioned that the valuation of the property would be more than `10 lakhs per cent and the property was subject to several attachments and has sought for time to settle the liability. Therefore, fresh valuation was also called for. The valuation report made available was of the year 2005 and therefore fresh OP(DRT) No.48/14 -:12:- valuation was sought for on 4/9/2006. As per fresh valuation report dated 23/3/2007, the value of the property was reported as `34,02,707/-. It was taking into account the aforesaid facts that the reserve price was fixed at `44 lakhs. However, as there were no bidders, the Officer had reduced the reserve price and effected sale of the property. Tribunal therefore found that the contentions urged by the petitioners cannot be sustained. Perusal of Ext.P7 order would show that the Tribunal had considered the entire issue and had come to a finding that no interference is called for with reference to the contention regarding undervaluation. However, the Tribunal granted an opportunity to the petitioner to redeem the mortgage. Para 24.2 is the relevant portion, which reads as under:-
"24.2. Therefore, the impugned order of the learned Recovery Officer is only to be confirmed, and the Appeal is liable to be disposed of on the following line:-
"In the result, this Tribunal comes to the conclusion that there is no infirmity in Annexure-A3 order dated 16.07.2009 as well as Annexure-A4 OP(DRT) No.48/14 -:13:- order dated 27.07.2009 of the learned Recovery Officer of this Tribunal, rejecting the plea of the appellants and thereby reducing the reserve price of the subject certificate scheduled property from Rs.44 lakhs to Rs.38 lakhs, and hence declines to interfere with the said proceedings of the learned Recovery Officer. Consequently, the Appeal is hereby dismissed.
"However, since the entire property had been constrained to be sold depriving the appellants and taking into consideration the repeated plea of the appellants that efforts are being taken to pay off the balance amount, by way of an equitable relief, this Tribunal is inclined to grant one more final opportunity to the appellants to redeem the subject property. Accordingly, if the remaining certificate debt along with upto date interest, costs and expenses, together with a sum equal to five percent of the purchase money as penalty for payment to the auction purchaser, is deposited on or before 31.08.2010, the learned Recovery Officer shall make an order setting aside the instant sale."
"And it is also made clear that in case of default by the appellants to comply in time the conditions as ordered hereinabove, there is no impediment for the learned Recovery Officer to proceed with the confirmation of sale and pursue further action in accordance with law."
9. The matter was carried in appeal and Ext.P8 is the OP(DRT) No.48/14 -:14:- said order. The Appellate Tribunal was also not inclined to accept the contention urged by the petitioners and accordingly, the appeal has been dismissed.
10. On perusal of the impugned orders, I do not think that there is any justification for this Court to interfere in the matter on the ground of undervaluation of property.
11. Another contention urged by the petitioners is regarding their right to redeem the mortgage. It is stated that the entire amount due to the Bank had been deposited before the Bank as well as before the Debts Recovery Appellate Tribunal and there was no reason to confirm the sale. The main contention urged is based on the delay in obtaining a copy of the judgment in Appeal No.34/2009. It is stated that though there was an entry in A Diary regarding the dismissal of Appeal No.34/2009 on 2/8/2010, copy of the order was not made available as provided under the statute. Therefore even the Recovery Officer had delayed the confirmation and the sale was confirmed only on 28/3/2011. OP(DRT) No.48/14 -:15:- Since the copy was not made available, petitioners were unaware of the direction to deposit the amount to redeem the mortgage. The direction was to deposit the amount on or before 31/8/2010 and the petitioner could not avail of the said opportunity as the certified copy was not delivered in time. In this regard, there is justification on the part of the petitioners in contending that they were not aware of the right to redeem the mortgage as directed in the appellate order in Appeal No.34/2009. Learned counsel submits that for filing the appeal before the Debts Recovery Appellate Tribunal, `11,92,000/- was deposited and therefore the Appellate Tribunal order ought to have permitted the petitioners to redeem the mortgage once it is found that the entire amount is deposited. Though it is contended by the learned counsel appearing for the additional respondent/auction purchaser that the petitioner ought to have known about the directions issued in Appeal No.34/2009, I do not think that the petitioners could have OP(DRT) No.48/14 -:16:- known about it unless the petitioners have received a copy of the same from the office of the DRT. The position of law in this regard is not in dispute but each case has to be considered on its own facts. This is an instance where sale of property has been held and the question regarding undervaluation was being considered by the Tribunal and the Tribunal had stayed confirmation of sale. Therefore, the sale could have been confirmed only after disposal of Appeal No.34/2009. The actual date on which the order in Appeal No.34/2009 was served on the petitioner is not available. But, since when it is an admitted fact that the Recovery Officer has deferred the confirmation of sale, it is rather clear that the order of the Appellate Tribunal was not available at the relevant time.
12. Having regard to the aforesaid factual situation, I am of the view that one more opportunity has to be given to the petitioners to save their property but the same cannot be at the cost of the auction purchaser/Bank, but at the cost OP(DRT) No.48/14 -:17:- of the petitioners.
13. The entire liability of the Bank has been settled by payment of `11,92,897/- by the Recovery Officer on 29/3/2011. The petitioner deposited `11,41,310/- before the Debts Recovery Appellate Tribunal. In Ext.P8 order, there is a direction to send the amount lying with the Tribunal along with accrued interest to the Bank. Learned counsel appearing for the Bank submits that such amount had not been received so far. The auction purchaser has deposited `38,88,510/- on 10/12/2009 and `3,46,500/- as value of stamp paper at the time of registration of sale deed. Though this is a case in which the sale deed had already been registered and the property is transferred in the name of the auction purchaser, as already indicated, since the petitioner did not get an opportunity to redeem the mortgage as stated in the order passed by the DRT, it would be appropriate to issue the following directions:-
(i) That the Debts Recovery Appellate Tribunal shall OP(DRT) No.48/14 -:18:- transfer the amount deposited by the petitioners to the Recovery Officer, Debts Recovery Tribunal, Ernakulam with accrued interest within fifteen days from the date of receipt of a copy of this judgment.
(ii) The petitioners shall pay an amount of `51,587/- to the Recovery Officer, Debts Recovery Tribunal, Ernakulam within a period of thirty days from the date of receipt of a copy of this judgment.
(iii) Petitioners shall further deposit interest at the rate of 9% per annum on `38,88,510/- from 10/12/2009 till the date of payment within thirty days from the date of receipt of copy of judgment.
(iv) Petitioners shall also remit `3,46,500/- before the Recovery Officer with interest on the said amount at the rate of 6% per annum from 24/5/2011 within the aforesaid period.
(v) If the amounts as stated above are deposited by the petitioners, the Debts Recovery Tribunal shall pass OP(DRT) No.48/14 -:19:- appropriate orders in Appeal Nos.30/2011 and 31/2011 setting aside the sale and cancelling the registered sale deed in favour of the auction purchaser.
(vi) The amounts deposited by the petitioners before the Debts Recovery Tribunal, the amount transferred by the Debts Recovery Appellate Tribunal and the balance amount available with the Recovery Officer with accrued interest shall be paid to the auction purchaser, on orders being passed by the Debts Recovery Tribunal setting aside the sale.
OP(DRT) is disposed of as above.
Sd/-
A.M. SHAFFIQUE, JUDGE Rp //True Copy// P.S to Judge