CWP No. 17785 of 2012. Case: Ms. IAA Hospital Pvt. Ltd Vs The Authorized Officer, UCO Bank. High Court of Punjab (India)
| Case Number | CWP No. 17785 of 2012 |
| Counsel | For Petitioner: Manish Jain, Adv. and For Respondents: Anupam Gupta, Sr. Adv., Ms. Nandini Nanda, Gautam Pathania, Karan Khehar, Sudhir Pruthi, Advs. |
| Judges | Ajay Kumar Mittal , J. and G. S. Sandhawalia, J. |
| Issue | Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54 of 2002) - Section 13(4); Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Enforcements) Rules (2002) - Rules 5, 8; Constitution of India - Article 226 |
| Citation | AIR 2014 P&H 161 |
| Judgement Date | July 11, 2014 |
| Court | High Court of Punjab (India) |
Judgment:
G. S. Sandhawalia, J.
1. The present judgment shall dispose of 3 writ petitions i.e. CWP Nos. 17785, 14741 and 15248 of 2012 since common questions of facts and law are involved in all the writ petitions. The facts are being taken from CWP No. 17785 of 2012, M/s. IAA Hospital Pvt. Ltd. and another v. The Authorized Officer, UCO Bank and others (hereinafter referred to as 'the main case').
2. The present writ petition is filed by the borrower and one of the guarantors challenging the sale notice dated 23.03.2012 (Annexure P-2) issued by the respondent-bank and the subsequent order dated 12.07.2012 (Annexure P-1) passed by the Debt Recovery Tribunal-II, Chandigarh (for brevity, 'DRT') in S.A. No. 179 of 2012 whereby, the sale of the property has been confirmed in favour of M/s. Ludhiana Mediways-respondent No. 2, the auction purchaser under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'the SARFAESI Act'). CWP No. 14741 of 2012 has been filed by the brother of petitioner No. 2 in the main case who is a guarantor and had mortgaged his residential property measuring 400 square yards situated at Sukhdev Nagar, South City, Ludhiana which is mentioned at Sr. No. 2 of the impugned sale notice. Similarly, CWP No. 15248 of 2012 has been filed by proposed buyer of the property which was auctioned to respondent No. 2.
3. The pleaded case of the petitioners is that petitioner No. 1 is existing company duly incorporated under the provision of the Companies Act, 1956 while petitioner No. 2 is one of its Directors and also the guarantor with respect to the loan availed by petitioner No. 1 from the respondent No. 1-bank. Petitioner No. 2 is also the owner of one of the properties that is put to auction in pursuance to the sale notice, which is the subject matter of challenge in the present writ petition. That petitioner No. 2, along with others being joint promoters of M/s. IAA Hospital Pvt. Ltd.-petitioner No. 1 set up a hospital in Ludhiana namely Ludhiana Mediciti (hereinafter referred to as 'the principal borrower'). In order to finance the project, the respondent-bank was approached for the purpose of the grant of loan facility. Six term loan proposals were sanctioned which were to carry interest @ BPLR+2% i.e. 14.25% with monthly rests. The loan was repayable in 84 months with the moratorium period of 12 months. In addition to the said term loan, the bank also sanctioned a cash credit facility of `175 lacs which was to carry interest @ BPLR+1.50% i.e. 13.75% per annum. The details of the loan sanctioned read thus:-
Rupee Term Loan-I: Rs.304.87 lacs
(Run down balance)
Rupee Term Loan-II: Rs.133.19 lacs
(Run down balance)
Rupee Term Loan-III: Rs.185.12 lacs
(Run down balance)
Rupee Term Loan-IV: Rs.447.37 lacs
(Run down balance)
Rupee Term Loan-V: Rs.899.80 lacs
(Run down balance)
Rupee Term Loan-VI: Rs.400.00 lakhs
for purchase of machinery
4. Petitioner No. 2 executed a Deed of Guarantee in favour of the bank and also mortgaged his residential property. It is pleaded that the principal borrower hospital had grown up to a 100-bed hospital and it was providing services under almost 20 medical departments and had acquired state-of-the-art equipment and providing medical care to 400-500 patients in the OPD alone. However, the loan could not be repaid in time and the company fell in arrears and it was agreed to restructure the amount, which was approved on 30.05.2011. The bank, however, initiated the process under the SARFAESI Act and issued demand notice dated 13.05.2011 (Annexure P-3) under Section 13(2) of the said Act claiming an amount of `22,84,74,378.43/- as on 26.04.2011. The objections were filed on 20.05.2011 to the bank (Annexure P-4). It was pleaded that no response was received on the said objections and negotiations were carried on and the petitioner offered to sell property bearing Nos. 200-201 at Vivek Enclave in Jalandhar in the name of the one of the guarantors-mortgagers Mrs. Kulwinder Kaur, wife of petitioner No. 2. Vide letter dated 25/29.06.2011 (Annexure P-5), permission was granted for sale of the property subject to the deposit of the sale proceeds with the bank. In pursuance of the said permission, Mrs. Kulvinder Kaur executed an agreement (Annexure P-6) admitting to the terms and conditions to sell the mortgaged plots and submitting the proceeds to the bank. In the meantime, the bank had issued a letter dated 13.06.2011 intimating its intention to declare petitioner No. 1 as a wilful defaulter. The company wrote to the bank on 30.06.2011 (Annexure P-7) protesting against the said action and also requested the bank to reconsider the matter and pointed out that sanction had been granted for sale of two properties. On 07.07.2011 (Annexure P-8), another letter requesting for restructuring was submitted to the bank and it was reiterated that the proceeds from the sale of the properties would be deposited directly with the bank and a further sum of `1 crore would be deposited on 31.12.2011. Request was made for re-scheduling of the rate of interest and that penal and overdue interest be waived. The bank, without any warning, published a possession notice under Sections 13(4) and 13(12) of the SARFAESI Act read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 (in short 'the Securitisation Rules') dated 06.12.2011 on 08.12.2011 (Annexure P-9) mentioning six properties pertaining to the hospital in the said notice. The petitioner-company wrote to the bank on 15.12.2011 reiterating its offer of settling the accounts but the bank issued another possession notice dated 21.12.2011 (Annexure P-11) with regard to the property Nos. 2, 3 and 4 mentioned in the sale notice. The notice included the personal property of petitioner No. 2 as well. Thereafter, sale notice was published on 17.01.2012 (Annexure P-12) wherein, the bank proposed to sell the assets of the company as well as the petitioner No. 2 and other mortgagers. Representatives of the company sought to meet the Manager of respondent No. 1 on 24.01.2012 but the bank Manager refused to meet them and even a cheque of `50,00,000/- was offered, however, no response was received.
5. The petitioners challenged the action of the bank by way of filing an application before the Debt Recovery Tribunal vide S.A. No. 139 of 2012 and the company on 16.02.2012 (Annexure P-14) was directed to pay a sum of `1 crore before 17.02.2012 along with sum of `1,00,000/-towards expenses incurred on publication and sale. The company was further directed to deposit various amounts with the bank and submit a proposal for settlement on 17.02.2012 and the bank was directed to decide the proposal within 15 days. The said amount was deposited on 17.02.2012 and in pursuance to the directions, proposal was submitted to the bank offering to pay various amounts. Vide letter dated 20.03.2012 (Annexure P-17), the proposal was rejected. S.A. No. 139 of 2012 was listed on 21.03.2012 (Annexure P-18) and was dismissed on account of the fact that the petitioners had not complied with the order as the counsel for the bank pointed out that there were directions to deposit `2 crores which had not been complied with. The impugned notice dated 23.03.2012 under section 13(2) of the SARFAESI Act was issued which was published in the newspapers on 24.03.2012 and it was proposed to sell the property by 31.03.2012 (i.e. within a period of 7 days as opposed to 30 days as provided under the Securitisation Rules). An application bearing M.A. No. 24 of 2012 in S.A. No. 139 of 2012 was filed on behalf of the petitioners seeking recalling of order dated 21.03.2012, which was dismissed on 30.03.2012 (Annexure P-19). The bank then sold the property to respondent No. 2 on 31.03.2012 for a sum of `23 crores and it was alleged that it was below the actual cost and the plant and machinery/equipment had also been sold which had not been valued by the bank as per its rejection letter dated 20.03.2012.
6. The petitioners filed CWP No. 6349 of 2012, M/s. IAA Hospital Pvt. Ltd. v. Authorized Officer, UCO Bank in this Court and the company was directed on 03.04.2012 (Annexure P-20) to deposit a sum of `23 crores with the Authorized Officer to establish its bona fides. The amount could not be deposited and the writ petition was withdrawn on 19.04.2012 (Annexure P-21). The petitioners filed S.A. 179 of 2012 and one of the other guarantors filed S.A. No. 178 of 2012 challenging the sale notice and all the S.As. were decided by common order dated 12.07.2012 (Annexure P-1) whereby, the said applications were dismissed. The writ petitioner in CWP No. 15248 of 2012, Dr. Nitin Aggarwal, filed S.A. No. 185 of 2012 challenging the same auction on the ground that adequate publicity had not been given and he was ready and willing to give a higher bid, which was also dismissed. The possession was handed over to the auction purchaser on 25.04.2012. I.A. No. 239 of 2012 had been filed by respondent Nos. 5 and 6-M/s. Kare Partners in S.A. No. 179 of 2012 wherein, the said respondents had offered to pay a sum equivalent to `25.30 crores to liquidate the outstanding dues to the bank. The said application was also rejected vide the impugned order. Punjab National Bank, one of the other lenders had filed I.A. No. 246 of 2012 stating that machinery and equipment hypothecated had illegally been handed over to the auction purchaser. The petitioners also had filed I.A. No. 273 of 2012 raising objections to the Panchnama and so called inventory whereby, the management of the hospital had also been sold which was not envisaged under the notice and the SARFAESI Act did not envisage the sale of the management. Accordingly, it was pleaded that the bank had not followed the due procedure and the property had been sold at a much lower price than the actual price. Another notice had been issued to sell the remaining mortgaged assets...
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