Karnataka High Court
Sri.K.V.Jayaprakash vs The Chairman on 25 May, 2022
Author: S.G. Pandit
Bench: S.G. Pandit
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF MAY, 2022
BEFORE
THE HON' BLE MR. JUSTICE S.G. PANDIT
WRIT PETITION No.9800/2022 (GM-RES)
BETWEEN:
SRI.K.V.JAYAPRAKASH
W/O LATE K. VISHWANATHAIAH SHETTY
R/AT NO.166, KRS ROAD
V.V.PURAM
BENGALURU-560004.
...PETITIONER
(BY SRI K N PHANINDRA, SR.COUNSEL A/W
SRI SRIKANTH PATIL K., ADV.)
AND:
1. THE CHAIRMAN
THE STATE BANK OF INDIA
A BODY CORPORATE CONSTITUTED
UNDER
THE STATE BANK OF INDIA ACT, 1955
HAVING ITS CORPORATE OFFICE AT
MADAM CAMA ROAD
NARIMAN POINT, MUMBAI.
2. THE MANAGING DIRECTOR
STRESSED ASSETS RESOLUTION GROUP
THE STATE BANK OF INDIA
MADAM CAMA ROAD
NARIMAN POINT, MUMBAI.
3. THE DEPUTY GENERAL MANAGER
STRESSED ASSETS MANAGEMENT
BRANCH-II
1ST FLOOR, D.NO.3-4-1013/A
2
CAC, TSRTC, BUS STATION
KACHEGUDA, HYDERABAD-500 027.
4. THE AUTHORIZED OFFICER
AND THE ASSISTANT GENERAL
MANAGER
STRESSED ASSETS MANAGEMENT
BRANCH-II
1ST FLOOR, D.NO.3-4-1013/A,
CAC, TSRTC, BUS STATION
KACHEGUDA, HYDERABAD-500 027.
5. BAGMANE DEVELOPERS PVT. LTD.,
LAKE VIEW 'A' BLOCK, 8TH FLOOR
BAGMANE TECH PARK
C.V.RAMAN NAGAR
BENGALURU-560 093.
...RESPONDENTS
(BY SRI G KRISHNAMOORTHY, SR.COUNSEL A/W
SRI VIGNESH SHETTY, ADV. FOR R1-R4
SRI SHASHI KIRAN SHETTY, SR.CONSEL A/W
SRI DEEPAK, ADV. FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE
IMPUGNED ORDER DATED 29.04.2022 PASSED BY THE R-1
VIDE ANNEXURE-A; DIRECT THE R-1 TO 4 NOT TO CONFIRM
THE SALE IN FAVOUR OF R-5 SOLE BIDDER AND ALSO
CANCEL/SET ASIDE THE SALE AND ETC.
THIS PETITION COMING ON FOR ORDERS THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
The petitioner-a guarantor to the loan obtained by M/s.Coastal Project Limited (Borrower) is before this Court under Article 226 of the Constitution of India praying for a writ of certiorari to quash the 3 communication/letter (Annexure-A) bearing No.SAMB- II/HYD/MMK/2022-23/72 dated 29.04.2022 addressed by the 1st respondent to the 5th respondent-purchaser.
2. Heard Sri K.N. Phanindra, learned Senior Counsel for Sri Srikanth Patil, learned counsel for the petitioner, Sri G. Krishna Moorthy, learned Senior Counsel for Sri Vignesh Shetty, learned counsel for respondents 1 to 4, Sri Shashi Kiran Shetty, learned Senior Counsel for Sri Deepak, learned counsel for the 5th respondent. Perused the writ petition papers.
3. Sri K.N. Phanindra, learned Senior Counsel for the petitioner would submit that petitioner is a guarantor and mortgager of the landed property situated at Yelahanka, Bangalore, as security to the loan obtained by M/s. Coastal Projects Limited, a public limited company, which is now under liquidation. As the borrower failed to repay the amounts due to the 1st respondent-the State Bank of India (for short 'the Bank'), the 1st respondent-Bank initiated action for 4 recovery under the Securitisation and Reconstruction of Financial Assests and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act') and brought the mortgaged property for sale. Contention of the petitioner is that the property in question is worth more than Rs.207.40 crores as per the guidelines value and more than Rs.350.98 crores market value. But the property is sold at Rs.135.50 crores to the 5th respondent. Further learned Senior Counsel would contend that 1st respondent-Bank has failed to obtain proper valuation as required under Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, (for short 'the Rules'). According to the learned Senior Counsel, before sale of immovable property, the authorised officer shall obtain valuation report, which has not been complied with by the 1st respondent-Bank. Thus he submits that property worth more than Rs.350.98 crores market value, the 1st respondent-Bank has sold the property in question to the 5th respondent for a very low price at Rs.135.50 crores. According to the learned 5 Senior Counsel, reserve price for the property fixed at Rs.135.00 crores itself is on the lower side. Thus learned Senior Counsel would submit that to save his property, petitioner is ready to make payment of Rs.135.50 crores for which the property is being sold. Thus he prays for setting aside impugned Annexure-A and prays for an opportunity to the petitioner to get back his property.
4. Per contra, Sri G. Krishna Moorthy, learned Senior Counsel for respondents 1 to 4 submits that sale has already taken place on 29.04.2022 and was confirmed on 30.04.2022, but sale certificate is not issued in view of the present writ petition. Further learned Senior Counsel submits that reserve price of Rs.135.00 crores was fixed on obtaining valuation report as required under Rule 8(5) of the Rules. Further learned Senior Counsel would submit that 1st respondent-Bank was able to sell the property in the seventh sale advertisement, since on earlier six occasions there were no buyers to purchase the mortgaged property, which 6 was brought to sale. Thus he submits that Rs.135.50 crores is the best price for the mortgaged property, which the Bank has secured on the seventh occasion. Further learned Senior Counsel would submit that the instant writ petition would not be maintainable, since alternate remedy is provided to the petitioner, under Section 17 of the SARFAESI Act. It is submitted that it is for the petitioner to approach the Tribunal seeking appropriate relief.
5. Sri Shashikiran Shetty, learned Senior Counsel for respondent No.5 supports the contention of Sri G. Krishna Moorthy, learned Senior Counsel and submits that 5th respondent has already paid 25% of the sale amount and is ready and willing to pay balance amount, on issuance of sale certificate and thus prays for dismissal of the writ petition.
6. It is an admitted fact that petitioner is a guarantor and mortgager to the loan obtained by M/s. Coastal Projects Limited, a Public limited Company, which is 7 under liquidation as on this date. It is also an admitted fact that due to failure on the part of the borrower to repay the loan amount, to recover the amount due from the borrower the mortgaged property is brought to sale. The sale notice was published in the newspaper dated 12.04.2022 and the sale has taken place on 29.04.2022 at Rs.135.50 crores. Admittedly the reserve price was Rs.135.00 crores as stated by the learned Senior Counsel for respondents.
7. The contention of the learned Senior Counsel for the petitioner is two fold viz., (a) the valuation of the property sold is more than Rs.300.00 crores whereas the property is sold at Rs.135.50 crores and (b) that procedure required to be followed under Rule 8(5) of the Rules is not complied with by obtaining the valuation report.
8. Whether valuation of the property is Rs.207.40 crores as per the guidelines value and more than Rs.350.00 crores market value, is a question of fact 8 which is to be proved by leading evidence. On the other hand, when the 1st respondent-Bank contends that it has obtained the valuation report, it is to be placed on record.
9. Thus I am of the view, that contention raised by the petitioner with regard to obtaining valuation report is a matter of evidence. Moreover, it is submitted that 1st respondent-Bank has obtained valuation report as required under Rule 8(5) of the Rules and fixed the reserve price. It is for the 1st respondent-Bank to place on record as to how the property is valued and how the reserve price is arrived at.
10. Section 17 of the SARFAESI Act provides remedy to any person (including borrower) aggrieved by any of the measures taken by the secured creditor under sub- section (4) of Section 13 of the SARFAESI Act. In the instant case, sale has taken place on 29.04.2022 and sale is confirmed on 30.04.2022. In view of the fact that sale has already taken place, it is for the petitioner to avail the remedy, which is available under Section 17 of 9 the Act. The Hon'ble Apex Court has made it clear that whenever the Statute/Act itself provides an alternate remedy, normally this Court would not exercise its jurisdiction under Article 226 of the Constitution of India. The Hon'ble Apex Court considering Section 17 of the SARFAESI Act and earlier decisions in respect of alternate remedy, in a case reported in PHOENIX ARC PRIVATE LIMITED Vs. VISHWA BHARATHI VIDYA MANDIR AND OTHERS reported in 2022 SCC ONLINE SC 44 has held at paragraphs 34, 35 and 36 as follows :-
"33. In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether ...............(c) the petitioner has any alternative or effective remedy for the resolution of the dispute.
34. In the case of Kanaiyalal Lalchand Sachdev and Ors. (supra) after referring to the earlier decisions of this Court in the cases of Sadhana Lodh Vs. National 10 Insurance Co. Ltd. and Anr., (2003) 3 SCC 524; Surya Dev Rai Vs. Ram Chander Rai (2003) 6 SCC 675 and State Bank of India Vs. Allied Chemical Laboratories, (2006) 9 SCC 252 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person.
35. Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. (supra) as well as in the case of Agarwal Tracom Private Limited (supra)."
11. By following the principles laid down by the Hon'ble Apex Court, I deem it appropriate to relegate the petitioner to Debt Recovery Tribunal to avail the remedy available under the SARFAESI Act. All the contentions of the parties are left open.
11
12. Parties shall maintain status quo for a period of 15 days from today, so as to enable the petitioner to approach the Debt Recovery Tribunal.
With the above, the writ petition stands disposed of.
Sd/-
JUDGE NG* CT:bms