Telangana High Court
Smt. Bandi Padma vs Canara Bank on 24 February, 2022
THE HON'BLE SRI JUSTICE UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE A. VENKATESHWARA REDDY
Writ Petition No.1262 of 2022
ORDER (per Hon'ble Sri Justice A. Venkateshwara Reddy):
1. The petitioner Nos.1 to 3 have filed the present Writ Petition under Article 226 of the Constitution of India seeking a direction, more particularly, one in the nature of Mandamus directing the respondents to close the loan account No.2498285000368 of M/s. Ganesh Traders and another loan account No.2498285000369 of M/s. Sri Sai Traders by receiving the book debts under One Time Settlement (for short 'OTS'), by deducting unauthorized debits and exorbitant rate of interest and to release the title deeds in respect of residential house bearing No.2-1-41//3 (new) corresponding to old house bearing No.2-1-35/B in Survey No.621 admeasuring 358.81 square yards situated at Amra Nagar, Vishwanath Complex, Peddapalli, Karimnagar District (hereinafter referred to as secured asset), in favour of the first petitioner. Consequently to declare the measures of the respondents under the provisions of the Securitization and Reconstruction of Page 2 of 21 UBJ & AVRJ WP No.1262 of 2022 Financial Assets and Endorsement of Security Interest Act, 2002 (for short 'SARFAESI Act').
2. The first petitioner is the mother and second and third petitioners are her children. The husband of first petitioner by name late Ganga Goud has availed credit facility to an extent of Rs.30 lakhs in the year 2017 from the first respondent bank in the name of M/s. Narender Traders, a proprietor concern, whereas the second petitioner-Narender Goud has availed credit facility to an extent of Rs.15 lakhs in the year 2017 from the first respondent bank in the name of M/s. Sri Sai Traders represented by its proprietor, M/s. Devender Goud, who is the elder son of the first petitioner.
3. a) This writ petition is filed for a direction to the first respondent bank to give an opportunity to the petitioners to pay the entire loan amount in both the loan accounts in the name of M/s. Ganesh Traders and M/s. Sri Sai Traders under OTS scheme by deducting unauthorized debits including the exorbitant rate of interest and to release the title deeds in favour of the petitioners. Late Ganga Goud Page 3 of 21 UBJ & AVRJ WP No.1262 of 2022 being the owner of the secured asset has created common security for credit facilities stated above from the first respondent bank in the year 2017. But, unfortunately he died on 22.12.2018 leaving behind the petitioners and elder son of the first petitioner as the only legal heirs. One loan account of M/s. Narender Traders was closed and the substantial amount is paid in another loan account of M/s. Sri Sai Traders by the borrowers.
3. b) It is further stated that the third petitioner herein who is the married daughter of late Ganga Goud and the first petitioner has challenged the e-auction notice published in the newspaper slating the date of auction on 27.03.2020 by filing Writ Petition No.5991 of 2020 before this Court and that writ petition was allowed on 18.01.2021, setting aside the demand notice 24.10.2019 and possession notice dated 14.01.2020 with a liberty to respondent bank to initiate fresh proceedings against the legal representatives of original borrower - late Ganga Goud who died on 22.12.2018. During his life time, late Ganga Goud has executed a Will Deed on 09.04.2011 bequeathing Page 4 of 21 UBJ & AVRJ WP No.1262 of 2022 the secured asset and other properties in favour of the first petitioner in the presence of witnesses. However, since the death of late Ganga Goud, their elder son-Devender Goud left the house and presently his whereabouts are not known and he did not bother to cooperate to clear the liability.
3. c) In the meanwhile, the first respondent bank has issued notice under Section 13 (2) of SARFAESI Act on 14.09.2021 for loan account No.2498285000368 standing in the name of M/s.Ganesh Traders and another loan account No.2498285000369 in the name of M/s. Sri Sai Traders. The petitioners have suitably replied to it on 12.11.2021, but the respondents have not considered the objections raised by the petitioners. In fact, the second respondent bank has issued possession notice under Section 13 (4) of SARFAESI Act on 21.12.2021. Thus the respondents without giving an opportunity to the petitioners to close the above loan accounts of M/s. Ganesh Traders and M/s. Sri Sai Traders by paying the entire debt under OTS scheme by deducting unauthorized Page 5 of 21 UBJ & AVRJ WP No.1262 of 2022 debts including exorbitant rate of interest and to release the title deeds are proceeding under SARFAESI Act. Hence, the writ petition is filed.
4. The petitioners have no other efficacious and adequate alternative remedy except to invoke the extraordinary jurisdiction of this Court, as the regular Presiding Officer post of Debt Recovery Tribunal (for short 'DRT'), Hyderabad is vacant.
5. The first respondent bank has filed caveat petition through their counsel M/s. M.V.K. Viswanatham, caused their appearance on 07.01.2022 and requested time to get instructions and to file counter. Accordingly, filed counter affidavit along with relevant material papers on 17.01.2022 and also filed additional counter with additional papers on 19.01.2022.
6. a) The main averments of the counter and additional counter filed on behalf of the respondents are that the petitioners are not entitled for Writ of Mandamus directing the respondents to close the loan account of M/s. Ganesh Traders and M/s. Sri Sari Traders by receiving the book Page 6 of 21 UBJ & AVRJ WP No.1262 of 2022 debts under OTS scheme by deducting unauthorized debits and to release the title deeds in respect of mortgaged property in favour of the first petitioner and consequently to declare the measures of respondents under SARFAESI Act as illegal etc. Recently, the Apex Court in the case of Bijnor Urban Cooperative Bank Limited, Bijnor & others v. Meenal Agarwal & others in Civil Appeal No.7411 of 201 on 15.12.2021 held that a Writ of Mandamus cannot be issued under Article 226 of the Constitution of India, directing the bank to positively consider the benefit of OTS scheme to the writ petitioner and the above judgment squarely applies to the facts of the present case. Thus, the present writ petition is liable to be dismissed on this count alone.
6. b) It is further pleaded by the respondents that the liability of M/s. Ganesh Traders as on 10.01.2022 is Rs.45,13,720/- with further interest and the liability of M/s. Sri Sai Traders is Rs.14,51,307/- with further interest and the total liability in both the accounts is Rs.59,65,027/- with further interest. As per the latest Page 7 of 21 UBJ & AVRJ WP No.1262 of 2022 valuation report submitted by the Approved Valuer of the respondent bank, the property fetches Rs.98,95,700/-. Therefore, the bank would be able to recover the entire amount in public auction and it cannot afford to settle the debt for lesser amount and that the petitioners have capacity to pay the dues. The petitioners have introduced a new element of Will Deed said to have been executed on 09.04.2011 by the deceased-Ganga Goud, but not even a single word is said about the so-called Will Deed either in the earlier writ petition or in the objections/representation against the demand notice filed through their counsel on 14.09.2021. It was also not mentioned in the list of documents deposited by late Ganga Goud on 17.11.2017, which was registered as document No.6646 of 2017 and the rectification deed executed on 15.09.2018.
6. c) It is further stated that the petitioners with an eye on further litigation developed a new story, that the elder son of late Ganga Goud, viz., Devender Goud left the house and his whereabouts are not known so as to keep him out of the transaction for the present and he will surface after Page 8 of 21 UBJ & AVRJ WP No.1262 of 2022 settlement of issues if any and to start a fresh litigation. This is possible because writ petition was filed by married daughter earlier and now wife and other children have filed the present writ petition, keeping the elder son out of litigation. In fact, the whereabouts of said Devendar Goud are known to the financial institutions and recently on 08.01.2022 he has taken credit card also. Hence, the petitioners cannot say that, his whereabouts are not known.
6. d) That on a comparison of the signatures of late Ganga Goud on the Will Deed with his signatures on the deposited title deeds executed on 17.11.2017 registered as document No.6646, the rectification deed dated 15.09.2018 registered as document No.7561 of 2018 on the file of Sub-Registrar, Peddapalli, along with approved plan in the year 2008 for construction of house containing the signatures of late Ganga Goud and on the Pan Card submitted to the bank, there is vast difference in the signatures on the Will Deed and the other documents indicated above same is visible to the naked eye.
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6. e) The respondent is a nationalized bank, it has sanctioned overdraft facility of Rs.30 lakhs to late Ganga Goud, proprietor of M/s. Ganesh Traders to secure due repayment of overdraft facility of Rs.30 lakhs sanctioned, late Ganga Goud has executed required loan documents and mortgaged the secured asset as security for repayment of loan interest, but he has failed to repay the said amount as agreed and he owed a sum of Rs.42,44,676/- as on 31.08.2021. The loan was sanctioned on 23.11.2007. He has stopped operation of the account and not cleared the dues in spite of telephonic and personal reminders. Accordingly, the account was classified as Non-Performing Asset (NPA) on 29.09.2019 as per the guidelines of the bank as well as the Reserve Bank of India (RBI).
6. f) Thereafter, the respondent bank has invoked the provisions of SARFAESI Act, issued demand notice dated 24.10.2019, possession notice dated 14.01.2020 and e- auction notice dated 23.02.2020. At this stage, the third petitioner has filed WP No.5991 of 2020 alleging that her father late Ganga Goud died on 22.12.2018 and the Page 10 of 21 UBJ & AVRJ WP No.1262 of 2022 proceedings against the dead person cannot be continued and that she along with her brothers are the legal heirs of late Ganga Goud, they were not put to notice of this loan transaction. Accordingly, this Court has allowed the writ petition on 18.01.2021 by setting aside the proceedings with a liberty to the bank to initiate fresh proceedings against the legal heirs of late Ganga Goud, the original borrower.
6. g) Thus the bank has initiated fresh proceedings against the legal heirs of original borrower by issuing fresh demand notice on 14.09.2021 u/s. 13 (2) of SARFAESI Act by giving 60 days time to pay the dues. The petitioners got issued a reply dated 12.11.2021 through their counsel. That on 26.11.2021 the bank has suitably replied to it, issued possession notice (symbolic) u/s.13 (4) of SARFAESI Act on 21.12.2021 and the bank took symbolic possession of the mortgaged property on 21.12.2021. There are no unauthorized debits in the accounts and interest was charged as per the terms of the contract. Accordingly, Page 11 of 21 UBJ & AVRJ WP No.1262 of 2022 prayed for dismissal of the writ petition with exemplary costs.
7. Heard Sri V.V. Ramana, learned counsel for the petitioners and Sri M.V.K. Viswanatham for the respondent bank.
8. Detailed submissions have been made by the learned counsel for the parties which are more or less on pleaded lines. Therefore, it may not be necessary for us to refer to in detail such submissions. However, the submissions so made have received the due consideration of the Court.
9. The relief prayed for through this wit petition is two- fold. The petitioners have prayed to issue a Writ of Mandamus directing the respondents to close the loan account of M/s. Ganesh Traders and another loan account of M/s. Sri Sai Traders by receiving the entire debt under OTS scheme by deducting unauthorized debits and exorbitant rate of interest and to release the title deeds in respect of secured asset in favour of the first petitioner, declaring the measures of respondents under SARFAESI Act as illegal. The petitioners also requested for stay of all Page 12 of 21 UBJ & AVRJ WP No.1262 of 2022 further proceedings including the possession notice dated 21.12.2021 in respect of the secured asset.
10. Admittedly, the third petitioner (daughter) herein has filed WP No.5991 of 2020 before this Court, when the respondent bank has initiated proceedings under SARFAESI Act as indicated above stating that the original borrower died on 22.12.2018 leaving behind his wife, two sons and the daughter and the proceedings initiated against the dead person are not maintainable and that the respondent bank has issued demand notice, possession notice under SARFAESI Act and e-auction was also scheduled and the proceedings initiated against the dead person (original borrower) who died in the year 2018 are not maintainable. The said writ petition was allowed on 18.01.2021 setting aside the proceedings initiated against late Ganga Goud. Pursuant to the said orders, fresh proceedings were initiated by the respondent bank. Notice u/s.13 (2) of SARFAESI Act was issued on 14.09.2021. Objections were received and considered whereafter possession notice was issued on 21.12.2021. The Page 13 of 21 UBJ & AVRJ WP No.1262 of 2022 petitioners who are the wife and younger son and daughter of the deceased Ganga Goud are challenging these proceedings leaving behind the elder son of late Ganga Goud.
11. The contention of the respondent bank is that for the first time through this writ petition, the existence of Will Deed dated 09.04.2011 is pleaded. Earlier at no point of time either at the time of execution of mortgage deed or rectification deed or in the objections submitted by the petitioners through their counsel, it was not mentioned about the said Will Deed. Further on comparison of the signatures on the Will Deed dated 09.04.2011 with other documents i.e., the deposit of title deeds, rectification deed, permission proceedings obtained from the Gram Panchayat and the Pan Card, there is vast difference in the signatures of late Ganga Goud found on the said Will Deed and the other documents, which are the registered/public documents as indicated above.
12. It is true as per the averments in the affidavit filed in support of WP No.5991 of 2020, there is no mention of the Page 14 of 21 UBJ & AVRJ WP No.1262 of 2022 said Will Deed. Similarly, in the objections filed by the petitioners through their counsel, there is no reference of the said Will Deed, dated 09.04.2011 and for the first time such plea is taken in the present writ petition. Conspicuously the elder son of late Ganga Goud viz., Devender Goud is not made a party to the proceedings stating that his whereabouts are not known. But, the averments in the counter affidavit shows that the financial institutions at Hyderabad are aware of his whereabouts, his address and telephone number and very recently on 08.01.2022, he has also taken a credit card. This averment in the counter filed by the respondent bank is not seriously disputed by the petitioners and they did not choose to file any rejoinder denying the same.
13. That being the factual position, the execution of Will Deed, bequeathing the property in favour of the first petitioner/wife leaving behind the other legal heirs, is a matter to be decided by the jurisdictional civil Court. This Court in the writ jurisdiction will not entertain such contentions and issues, which are to be decided after Page 15 of 21 UBJ & AVRJ WP No.1262 of 2022 hearing the parties and adducing evidence in accordance with law. Therefore, the contention of the petitioners that late Ganga Goud has executed a Will Deed dated 09.04.2011, bequeathing the secured asset in favour of the first petitioner and that the respondent bank may be directed to receive the entire amount under OTS scheme and to release the title deeds of secured asset in her favour, in the absence of making Devender Goud, the elder son of Ganga Goud as one of the party to the writ petition cannot be accepted.
14. With regard to the prayer of the petitioners for a Writ of Mandamus directing the respondents to close the account under OTS scheme by deducting the unauthorized debits and exorbitant interest, the learned counsel for the respondents has relied on the judgment of the Hon'ble Supreme Court of India in Bijnor Urban Cooperative Bank Limited's case (stated supra). After elaborate discussions, the Hon'ble Supreme Court in para-11 of the said judgment observed as under:
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UBJ & AVRJ WP No.1262 of 2022 "11. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to rant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove."
15. In the present case, a perusal of the averments made in the counter filed by the respondent bank would show that as on 10.01.2022 the liability of M/s. Ganesh Traders is Rs.45,13,720/- with further interest and the liability of Page 17 of 21 UBJ & AVRJ WP No.1262 of 2022 M/s. Sri Sai Traders is Rs.14,51,307/- with further interest and the total liability in both the accounts is Rs.59,65,027/- with further interest. As per the latest valuation report submitted by the Approved Valuer of the respondent bank, the subject property fetches Rs.98,95,700/- and as the bank would be able to recover the entire amount in public auction, it cannot afford to settle the debt for a lesser amount.
16. As per the revised guidelines issued by the RBI, the grant of benefit of OTS scheme cannot be prayed as a matter of right and the same is subject to fulfilling, the eligibility criteria in the scheme. Ultimately, it is for the bank to take conscious decision in its own interest and to secure/recover the outstanding debt and no bank can be compelled to accept a lesser amount under OTS scheme.
17. Be it stated that when the facts of the case on hand, as discussed above, are tested on the touch stone of the law laid by the Supreme Court in Bijnor Urban Cooperative Bank Limited's case (stated supra), the answer is in the negative and a Writ of Mandamus cannot be issued in Page 18 of 21 UBJ & AVRJ WP No.1262 of 2022 exercise of the powers under Article 226 of the Constitution of India, directing the respondent bank to positively consider/grant the benefit of OTS to the wit petitioners.
18. The Supreme Court in K.D. Sharma v. Steel Authority of India Limited and others1 held that:
"The jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary. Prerogative writs mentioned therein are issued for doing substantial justice. It is, therefore, of utmost necessity that the petitioner approaching the writ court must come with clean hands, put forward all the facts before the court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the court, his petition may be dismissed at the threshold without considering the merits of the claim.
A prerogative remedy is not a matter of course. While exercising extraordinary power a writ court would certainly bear in mind the conduct of the party who invokes the jurisdiction of the court. If the applicant makes a false statement or 1 (2008) 12 SCC 481 Page 19 of 21 UBJ & AVRJ WP No.1262 of 2022 suppresses any material fact or attempts to mislead the court, the court may dismiss the action on that ground alone and may refuse to enter into the merits of the case."
19. On a careful examination of the factual matrix of the case, it is noticed that in the earlier writ petition filed by the third petitioner, vide WP No.5991 of 2020, there was no mention of Will Deed dated 09.04.2011 said to have been executed by late Ganga Goud. Pursuant to the directions in WP No.5991 of 2020, the respondent bank has initiated fresh proceedings. Even in the objections submitted through their counsel, the petitioners did not mention about the alleged Will Deed. For the first time, through this writ petition they have pleaded about the execution of Will Deed dated 09.04.2011 by late Ganga Goud bequeathing the secured asset in favour of the first petitioner, but conspicuously, Devender Gound, who is elder son of late Ganga Goud, is not made a party to this proceedings stating that his whereabouts are not known. 19.1. Per contra, the respondent bank has come up with a definite plea raising doubts on the genuineness of the said Page 20 of 21 UBJ & AVRJ WP No.1262 of 2022 Will Deed on comparison of the signatures of late Ganga Goud found thereon, with his admitted/undisputed signatures on registered mortgage deed, rectification deed, Gram Panchayat permission proceedings and PAN card which are registered documents/public documents with the bank. The respondent further asserts that on 08.01.2022 Devender Goud has obtained credit card, the bank is aware of his address and telephone number and that his whereabouts are known to the financial institutions at Hyderabad. Thus the petitioners have suppressed several facts to suit their convenience, appears to have initiated collusive action, did not approach the Court with clean hands, failed to disclose true and complete facts and therefore not entitled for any benefit exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution of India.
20. Since the respondent bank has initiated the proceedings under SARFAESI Act, the petitioners along with Devender Goud, being the legal heirs of late Ganga Goud have efficacious and adequate alternative remedy Page 21 of 21 UBJ & AVRJ WP No.1262 of 2022 under the provisions of SARFAESI Act. They may approach the competent Tribunal and file required application under Section 17 of SARFAESI Act for redressal of their grievance, if any.
21. Therefore, in the light of the above judicial pronouncements of the Supreme Court and considering the conduct of the petitioners, as discussed above, they are not entitled to any relief including the interim relief in this writ proceeding.
22. In the result, the writ petition is dismissed. However, in the circumstance of the case, there shall be no order as to costs.
As a sequel, interlocutory applications, if any pending shall stand closed.
________________________ JUSTICE UJJAL BHUYAN ________________________________________ JUSTICE A. VENKATESHWARA REDDY Date: 24.02.2022 Isn