Writ Petition Nos. 24241 to 24244, 32610 and 32611 of 2012 and M.P. Nos. 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 4, 4, 5 and 6 of 2012. Case: 1. Mrs. Lakshmi Mohan and M. Premkumar, 2. M/s. Airtech Projects Engineers Pvt. Ltd., The Chief Manager and Authorised Officer, United Bank of India, The Registrar, Debts Recovery Tribunal - II and The Registrar, Debts Recovery Appellate Tribunal, Egmore Vs 1. M/s. Airtech Projects Engineers Pvt. Ltd., The Chief Manager and Authorised Officer, United Bank of India, The Registrar, Debts Recovery Tribunal - II and The Registrar, Debts Recovery Appellate Tribunal, Egmore, 2. Mrs. Lakshmi Mohan and M. Premkumar. High Court of Madras (India)
| Case Number | Writ Petition Nos. 24241 to 24244, 32610 and 32611 of 2012 and M.P. Nos. 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 4, 4, 5 and 6 of 2012 |
| Counsel | For Appellant: Mr. V.T. Gopalan, S.C. for M/s. Sree Sun Associates in Writ Petition Nos. 24241 and 24244 of 2012 and Mr. F.B. Benjamin George in Writ Petition Nos. 32610 and 32611 of 2012 and For Respondents: Mr. V.T. Gopalan, S.C. for M/s. Sree Sun Associates for Respondents 2 and 3 in Writ Petition Nos. 32610 and 32611 of 2012, Mr. F.B. ... |
| Judges | Chitra Venkataraman and R. Karuppiah, JJ. |
| Issue | Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 - Sections 13, 13(10), 13(12), 13(2), 13(4), 17, 18, 3(4), 38; Transfer of Property Act, 1882 - Sections 13(2), 69, 69(3), 69(4), 69-A |
| Judgement Date | March 22, 2013 |
| Court | High Court of Madras (India) |
Order:
Chitra Venkataraman, J.
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Writ Petition Nos. 32610 and 32611 of 2012 and 24241 to 24244 of 2012 are filed by the United Bank of India and the purchasers of the guarantor's property respectively in the auction conducted by the Authorised Officer of the Bank against the orders of the Debt Recovery Appellate Tribunal in R.A.(SA) Nos. 86 and 87 of 2010 dated 31.8.2012 and the orders of the Debt Recovery Tribunal in I.A. Nos. 1026 and 1027 of 2011 in R.A.(S.A.) Nos. 86 and 87 of 2010 dated 31.8.2012. The first respondent in the above Writ Petitions is Airtech Projects Engineers Pvt. Ltd., the borrower, who defaulted in the payment of its dues to the bank. Since the issue and facts are common, the status of the parties as in W.P. No. 31610 of 2012, filed by the Bank, is maintained herein in this order.
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The first respondent herein had the cash credit facility for Rs. 85.00 lakhs from the bank. One of its Directors by name Vasantha Devi (not a party in the Writ Petitions) offered her immovable property of an extent of 2.04 Grounds (4900 sq. ft. at 32, McNichols Road, Chetpet, Chennai-31 for the above-said credit facility as security and guaranteed the repayment of the dues. Admittedly, the first respondent did not repay its due; thus its account became NPA. This led to the petitioner issuing a demand notice on 01.08.2008, calling upon the first respondent and its Directors to repay the dues of Rs. 88,52,741/- within a period of 60 days of receipt of the notice. On issuing the notice, the petitioner also arranged for valuation of the property. After due notice to the guarantor and in her presence, on 14.10.2008, the property given as security was valued at the market price of Rs. 2,68,20,000/- by one M/s. United Shakthi Associates. The petitioner served notice of possession and sale notice dated 12.11.2008 on the borrower. The petitioner took possession of the secured asset on 12.11.2008 and had the valuation done once again by the very same valuer who did the valuation on 14.10.2008. Although the market value of the secured asset was arrived at, the valuer fixed the market value at Rs. 2,68,20,000/- and the distress sale value at Rs. 2,14,56,000/-. The service was accepted by the Authorised Officer on the upset price at Rs. 2,15,00,000/-. It is stated that a combined possession "cum" auction notice dated 12.11.2008 was issued through publication on 17.11.2008 fixing the date of sale as 04.01.2009 at 12.00 noon. Since this happened to be a Sunday, through a corrigendum affixed on the notice board of the Bank, the same was adjourned to 05.01.2009.
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The first respondent challenged the notice dated 12.11.2008 before the Debt Recovery Tribunal III, Chennai in S.A. No. 136 of 2008 questioning the date of sale originally fixed for 04.01.2009, that it being a Sunday, the sale could not go on. According to the petitioner, the corrigendum issued postponing the sale to 05.01.2009 was not brought to the notice of the Debt Recovery Tribunal. By order dated 29.12.2008, the Debt Recovery Tribunal set aside the possession-cum-auction notice dated 12.11.2008. It however permitted the Bank to take action afresh according to law. The petitioner challenged this in C.R.P. No. 501 of 2009 before this Court, contending that the order passed by the Debt Recovery Tribunal was in violation of the principles of natural justice, the same having being passed without hearing the petitioner. The first respondent did not respond to the notice in the Civil Revision Petition. By order dated 21.4.2009, this Court allowed the Civil Revision Petition and remanded the case back to the Debts Recovery Tribunal No. II, Chennai, to decide the case on merits and in accordance with law, after notice of hearing to the parties.
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However, in the meantime, the petitioner bank issued another possession-cum-sale notice on 18.3.2009 under Section 13(4) of the SARFAESI Act, fixing the auction sale on 24.4.2009. The creditor Bank was stated to have received two offers. In the auction sale held on 24.4.2009, respondents-2 and 3 (Writ Petitioners in W.P. Nos. 24241 to 24244 of 2012) were declared as successful bidders at a total bid amount of Rs. 2,17,40,000/-. Since they paid 25% of the bid amount (Rs. 2,15,00,000/-), they were declared as successful bidders. This auction sale dated 18.03.2009 was again challenged by the borrower/first respondent in S.A. No. 52 of 2009 before the Debt Recovery Tribunal II, Chennai and it sought for stay of the auction sale to be held on 24.4.2009. By order dated 21.04.2009, the Debt Recovery Tribunal granted a conditional order of stay that the first respondent/borrower shall deposit a sum of Rs. 25 lakhs on or before 21.5.2009 and a further sum of Rs. 25 lakhs on or before 21.6.2009 and the Bank was, however, permitted to proceed with the auction, but was directed not to confirm the auction sale till 21.5.2009. Admittedly the borrower paid Rs. 10,00,000/- to the Bank on 23.04.2009.
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Aggrieved by this, the first respondent/borrower filed an appeal before the Debt Recovery Appellate Tribunal in S.A. No. 307 of 2009. By order dated 01.05.2009, the Debt Recovery Appellate Tribunal granted stay on condition that the defaulter/borrower deposited a sum of Rs. 7,50,000/- by 02.06.2009 and another sum of Rs. 7,50,000/- by 06.07.2009. On 28.05.2009, the borrower paid Rs. 7,50,000/-. Admittedly, the first respondent had paid a sum of Rs. 10.00 lakhs on 23.4.2009; Rs. 7.50 lakhs on 28.5.2009; Rs. 6.50 lakhs on 19.6.2009 and Rs. 1.00 lakh on 30.7.2009, totalling to a sum of Rs. 25,00,000/-.
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As against these orders dated 21.4.2009 and 01.05.2009 passed by the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal respectively, the petitioner filed Writ Petitions in W.P. Nos. 9686 and 9700 of 2009 before this Court. By order dated 02.06.2009 in W.P. No. 9700 of 2009, this Court directed the Debt Recovery Tribunal to dispose of S.A. Nos. 136 of 2008 and 52 of 2009 within a period of two months from the date of receipt of the order. W.P. No. 9686 of 2009, challenging the order of the Debt Recovery Appellate Tribunal was disposed of later.
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Pursuant to the order dated 06.05.2009 in W.P. No. 9700 of 2009, the Debt Recovery Tribunal passed orders on 01.10.2009 in S.A. Nos. 136 of 2008 and 52 of 2009, dismissing both the applications on 01.10.2009, holding that Section 13(4) proceedings dated 12.11.2008 and 18.3.2009 were in accordance with the Act. Pursuant to this, the successful bidder paid the balance sale consideration on 05.10.2009 and the sale certificate was issued on 10.10.2009. Later, on 15.10.2009, the sale certificates were also registered before the Registering Authorities. As against the order of the Debts Recovery Tribunal, the first respondent-borrower preferred S.A. Nos. 749 and 750 of 2009 before the Debt Recovery Appellate Tribunal, which stayed the order of the Debt Recovery Tribunal.
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We further note that the borrower filed Writ Petitions against the orders of the Debt Recovery Tribunal dated 01.10.2009 in W.P. Nos. 22453 and 22454 of 2009 and sought for a Writ of Mandamus to forbear the Bank from recovering the sale consideration from the auction purchaser. By order dated 03.11.2009, this Court directed the borrower to pay Rs. 15,00,000/- to the Bank and directed the Bank not to confirm the sale. The borrower paid the said amount on 16.11.2009. The writ petitions were disposed of on 30.11.2009 with the direction to the borrower-first respondent to work out the remedies before the Debt Recovery Appellate Tribunal in the pending appeal. It may be noted that the purchasers were handed over physical possession on 06.03.2010. From the sale proceeds, a sum of Rs. 79,06,445.32, due in the account of the borrower was credited to the loan account and the balance amount of Rs. 1,38,33,554.32 was returned to the borrower by way of pay order dated 08.03.2010. It is a matter of record that the Debt Recovery Appellate Tribunal passed an order on 03.03.2010 that it had no jurisdiction to grant stay without the pre-deposit as per Section 18 of the SARFAESI Act. As against this, the borrower filed W.P. Nos. 4772 and 4773 of 2010. By order dated 09.03.2010, this Court directed the Debt Recovery Appellate Tribunal to dispose of the application filed by the borrower.
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By order dated 20.06.2011, the Debt Recovery Appellate Tribunal allowed the appeals filed against the order dated 01.10.2009 and directed the petitioner bank to restore possession of the secured asset to the first respondent within seven days from the date of receipt of a copy of the order. The Debt Recovery Appellate Tribunal pointed out from the documents produced by the bank that the Earnest Money Deposit paid by both the bidders were less than the prescribed Earnest Money Deposit, viz., 10% of the upset price of Rs. 21,50,000/-. Thus as against a sum of Rs. 21,50,000/-, both the bidders had paid a sum of Rs. 21,15,000/- only. In the circumstances, pointing out to the ineligibility of the purchasers to participate in the auction, among various other grounds on the issuance of possession notice, bona fides on the obtaining of the valuation report from the valuer, the Tribunal allowed the appeals filed by the borrower, thereby set aside the sale and the possession taken on 12.11.2008. This led to the filing of the Writ Petitions by the bank and the purchasers/respondents 2 and 3 before this Court, in W.P. Nos. 16120 and 16121 of 2004 (at the instance of the bank) W.P. Nos. 15321 and 15322 of 2011 (at the instance of the Purchasers).
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By order dated 16.08.2011, this Court set aside the order of the Tribunal and remanded the same to the Debt Recovery Appellate Tribunal for hearing once again; that as the appeal memorandum did not contain any challenge made as to the non-compliance of Rule 8(5) of the Rules or the violation of the conditions in the auction notification, the auction purchasers were not in a position to rebut the said contention. This...
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