Writ Petition No. 701 of 2014. Case: Shivabassappa I. Kankanwadi and Ors. Vs Mapusa Urban Co-operative Bank of Goa Ltd. and Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 701 of 2014 |
| Counsel | For Appellant: G. Agni and Eeshan Usapkar, Advocates and For Respondents: P. Rao, Advocate |
| Judges | F. M. Reis and K. L. Wadane, JJ |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 34, 35; Code of Civil Procedure, 1908 (CPC) - Section 11; Constitution of India - Articles 226, 227, 32; Limitation Act, 1963 - Section 14; Multi-state Co-operative Societies Act, 2002 - Sections 84, 84(4), 84(5); Securitisation and Reconstruction of Financial Assets and Enforcement of Security ... |
| Judgement Date | March 17, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
F. M. Reis, J.
1. Heard Mr. G. Agni, learned counsel appearing for the petitioners, Mr. P. Rao, learned counsel appearing for the respondent No. 1 and Mr. D. Lawande, learned Government Advocate appearing for the respondent Nos. 3 and 4.
2. The above Writ Petition seeks for a direction inter-alia to quash and set aside the impugned orders dated 10.07.2014 and 30.10.2014 and the impugned notices dated 31.10.2011 and 20.11.2013 issued under Sections 13(2) and 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as " the SARFAESI Act") being illegal and bad in law.
3. Briefly, the facts of the case as stated by the petitioners are that the petitioner No. 1 appointed one Mr. Ajay Verma, proprietor of M/s. Aesquire Estates to develop a plot of land belonging to the petitioner No. 1. The said Mr. Ajay Verma availed a loan from the respondent No. 1 by offering a security of the petitioners' land with building. The respondent No. 1 sanctioned a loan of Rs. 15 lakhs on 05.12.1998 in the name of the petitioner No. 1. However, in the same sanctioned letter, clandestinely, it was mentioned that the entire loan amount is to be adjusted to the cash credit account of M/s. Asqueire Estate and the account was to be closed. The purpose of the loan was also mentioned to take over the entire existing liability of M/s. Asqueire Estate. It is further the contention of the petitioners that without their consent, sanctioned loan was re-worked at Rs. 18 lakhs somewhere in the year 1999. It is further their case that the petitioners assumed that the loan was required for the purpose of putting up the construction in the subject property wherein the petitioners were supposed to get a flat and as such, the petitioners were induced by the said Mr. Ajay Verma to execute a mortgage deed by convincing the petitioners. The petitioners further states that bonafidely believing the said Mr. Ajay Verma that they would be put in possession of the entire ground floor and on the basis of the assurance of the said Mr. Ajay Verma, the deed of mortgage was signed with the respondent No. 1 without understanding the consents or implications thereof. It is further the case of the petitioners that on 25.05.2007, an arbitral award ordering the recovery of the loan amount came to be obtained by the respondent No. 1 by initiating proceedings under Section 84(4) of the Multi State Co-operative Societies Act, 2002 (herein after referred to as " the Co-operative Societies Act, 2002"). But however, the arbitral award came to be set aside by the learned District Judge on 03.06.2011 by holding that the whole transaction of disbursement was fraught with disparities and for all purposes it was a fraudulent transaction. Thereafter, on 31.10.2011, the respondent No. 1 issued notice under Section 13(4) of the SARFAESI Act and subsequently, on 20.11.2013 the petitioners were issued possession notice taking over of the premises of the petitioners as mentioned in the said notice. The said notice was duly replied by the petitioners pointing out that by judgment dated 03.06.2011 the award dated 25.05.2007 passed by the Arbitrator was quashed and set aside. It was also pointed out that having availed of the remedy for recovery of the alleged amount by way of arbitration proceedings and having so failed, it was now not available in law to the respondent No. 1 to initiate another proceedings by way of second inning. Despite of receiving the said reply, the respondent No. 1 continued to visit the property and threatened the petitioners which forced the petitioners to lodge a complaint to the police. Thereafter, the impugned order came to be passed dated 10.07.2014 and subsequently, the second impugned order came to be passed on 31.10.2014. Being aggrieved by the said orders as being unsustainable in law, the petitioners have filed the above Writ Petition for the reliefs referred to herein above.
4. The respondent No. 1 filed their affidavit in reply inter-alia contending that the petitioners have approached this Court to quash the impugned order dated 10.07.2014 passed by the respondent No. 4 as well as the order dated 30.10.2014 passed by the respondent No. 3 besides the notices issued under Section 13(2) and Section 13(4) of the SARFAESI Act, against which orders the petitioners have an effective and efficacious remedy of filing application under Section 17 of the SARFAESI Act. It is further their case that the petitioners had availed a loan of Rs. 18 lakhs and have been consistent defaulters. It is further their case that the proceedings for taking possession under the SARFAESI Act, are non-adjudicatory in nature and considering the scheme, scope and object of the SARFAESI Act, this Court may relegate the petitioners to the alternate remedy. It is further their contention that the petitioners have sought for loan of Rs. 18 lakhs vide application dated 28.01.1999 and in terms of the said application the said loan was disbursed and as sought by the petitioners the loan amount was appropriated to utilize the taking over of the entire/balance liability from M/s. Aesquire Estates. It is further their contention that the security for repayment of such amount was in the form of a flat at Green Field Apartments and the entire lower ground floor with associated land. It is further their case that the petitioners had defaulted in repayment of the said loan amount which entitled the respondent No. 1 to issue a statutory demand notice. It is further their case that the deed of mortgage was executed whereby the petitioner No. 1 mortgaged the entire ground floor which he had agreed to purchase from M/s. Aesquire Estates, who was authorized to develop the property by the petitioners and the second mortgagors. It is further their case that the petitioners have also mortgaged the flat on the upper ground floor bearing house No. 348/D in the building known as "Green Field Apartments". It is further their case that the acquisition notices were issued in terms of the SARFAESI Act for the recovery of the said loan amount from the petitioners. It is further their case that the respondent No. 4 after examining the affidavit and in discharge of his statutory duties passed an order for delivering the possession to the respondent No. 1. The said possession was obtained in terms of Section 14 of the SARFAESI Act. It is further their case that the entire procedure as provided under the SARFAESI Act, have been duly complied with and the possession of the said properties was not handed over to the respondent No. 1 by the respondent No. 3 as the respondent No. 1 was informed by the respondent No. 3 that he was intimated that this Court had passed an order restraining the respondents herein from taking any further action in pursuance to the order dated 10.07.2014 and notice dated 13.10.2014. It is further contention of the respondent No. 1 that prior to initiating such proceedings under the SARFAESI Act, the proceedings under the Cooperative Societies Act, 2002 were also resorted to by the respondent No. 1 wherein the Arbitrator has passed an award against the petitioners and one Shrikant Naik on 25.05.2007 whereby the petitioners and said Shrikant Naik were directed to pay an amount of Rs. 18,10,855/- as on 11.10.2001, with further interest at the rate of 18.5% per annum. It is further their case that the petitioners challenged the said arbitral award on 22.05.2008 before the Principal District Judge, North Goa, Panaji under Section 34 of the Arbitration and Conciliation Act, 1996, (herein after referred to as "the Arbitration Act, 1996") who has set aside the arbitral award dated 25.05.2007. It is further their case that the said judgment and order dated 03.06.2011 is without jurisdiction and is a nullity, inasmuch as the learned District Judge had no jurisdiction to entertain any application under Section 34 of the Arbitration Act, 1996 beyond 25.09.2007 even if it was accompanied by an application for condonation of delay. It is further their case that the proceedings under the Co-operative Societies Act, 2002 being in the nature of proceedings for recovery of dues of the respondent No. 1 are in fact complimentary to the expeditious mode of recovery envisaged and sanctioned under the SARFAESI Act. It is further their case that the learned District Judge has gone beyond the scope envisaged under Section 34 of the Arbitration Act, 1996 and as such the orders passed therein are without any jurisdiction. The respondent No. 1 as such points out that all the contentions sought to be raised by the petitioners in the above petition can be raised under Section 17 of the SARFAESI Act and as such prayed that the petition be rejected.
5. Mr. Agni, learned counsel appearing for the petitioners has pointed out that the proceedings sought to be initiated under the SARFAESI Act, are patently without jurisdiction and in any event erroneous exercise of jurisdiction as admittedly, the respondent No. 1 had already initiated proceedings under the Co-operative Societies Act, 2002 which resulted in an order in favour of the petitioners. The learned counsel further pointed out that it is the case of the petitioners that the alleged mortgage sought to be invoked by the respondent No. 1 is a fraudulent document which does not inher any benefit to the petitioners and as such the respondent No. 1 is not entitled to invoke such document to initiate the proceedings under the SARFAESI Act. The learned counsel further pointed out that the...
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