Writ Petition No. 4033 of 2010. Case: Union Bank of India Vs The State of Maharashtra through the Office of the Government Pleader, Public Works Department and Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 4033 of 2010 |
| Counsel | For Appellant: Pravin Samdani, Sr. Adv., Harinder Toor, Nainesh N. Amin, Adv., i/b., andN.N. Amin & Co. and For Respondents: V.S. Gokhale, AGP, Lillan Lobo, Adv., G.S. Godbole, Adv., i/b., and Khushbu Prabhu, Adv. |
| Judges | D.D. Sinha and Mridula Bhatkar, JJ. |
| Issue | Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970; Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13, 13(2) 13(4), 14, 14(3), 17, 18 and 31; NPA Act - Section 14; Constitution of India - Articles 226 and 227; General Clauses Act - Section 21 |
| Citation | AIR 2010 Bom 150 |
| Judgement Date | July 05, 2010 |
| Court | High Court of Bombay (India) |
Judgment:
D.D. Sinha, J.
1. Rule, returnable forthwith. Heard the petition finally on merits at the stage of admission.
2. The Petitioner is a body corporate registered under the Banking Companies (Acquisition & Transfer of Undertakings) Act V of 1970. The Respondent No. 3 is a partnership firm of which Respondent Nos. 4 and 5 are partners. Respondent Nos. 4 and 5 are the guarantors to the credit facilities availed by the Respondent No. 6 who has created mortgage so as to secure the debts of the Petitioner bank. Those properties are as follows:
1. Factory land and building at Survey No. 157, Hissa No. 1, 2, 3 Village Nadhal, Taluka: Khalapur, District Raigad, Maharashtra State.
2. Factory land and building at Survey No. 158, Hissa No. 1, Village Nadhal, Taluka: Khalapur, District: Raigad, Maharashtra State.
3. Factory land and building at Survey No. 158, Hissa No. 2-B, Village Nadhal, Taluka: Khalapur, District: Raigad, Maharashtra State.
4. Factory land and building at Survey No. 159, Hissa No. 1, Village Nadhal, Taluka Khalapur, District: Raigad, Maharashtra State.
All the aforesaid properties will be referred as "mortgage properties" for the sake of convenience.
3. The facts which have given rise to the filing of the instant petition are as follows:
4. It is the case of the Petitioner that pursuant to the request of the Respondent No. 3 for grant of various credit facilities, the Petitioner have from time to time granted the credit facilities to Respondent No. 3 and last such credit facility was granted vide Sanction Advise dated 10th April 2007 and Working Capital Term Loan of Rs. 10 Crores was carved out and the balance of Rs. 7.97 Crores was retained as Packing Credit limit.
5. Respondent No. 3 and the mortgagors/guarantors have executed necessary documents for securing the debts of the Respondent No. 3. It is submitted that pursuant to the restructuring of the credit facilities, the Respondent No. 6 in his personal capacity as a owner of the immovable properties has on 29th March 2007 confirmed that he had deposited the title deeds of the mortgaged properties hereto with the Petitioner on 23rd December, 2003 and 31st January, 2005 to secure the repayment of credit facilities aggregating to Rs. 36.80 Crores together with interest and requested the Petitioner to continue to retain the said title deeds as a security for repayment of the revised credit facilities aggregating to Rs. 30.82 Crores. It is submitted that the Respondent No. 6 and his wife Respondent No. 5 have guaranteed the payment of the dues of the Respondent No. 3 in consideration of sanction of restructured credit facilities to the Respondent No. 3 by executing the Letter of Guarantee dated 3rd April 2007 for an amount of Rs. 30.82 Crores.
6. The learned Counsel for the Petitioner has submitted that Respondent No. 3 has defaulted in repayment of dues of the Petitioner bank and the Petitioner bank having classified the account of such debt as Non Performing Asset (NPA) on 31st May 2007, has issued notice dated 26th June 2007 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (referred to as "SARFAESI Act" for the sake of brevity) calling upon the Respondent No. 3 and Respondent No. 6 - mortgagors / guarantors to pay to the Petitioner within 60 days from the date of notice a sum of Rs. 28,05,26,044.66 paise together with interest. Respondent No. 3 and the mortgagors / guarantors have been served by personal service and they have acknowledged the service of the notice.
7. It is the case of the Petitioner that on failure on the part of the Respondent Nos. 3 and 6 to comply with the requisitions as contained in the notice dated 26th June 2007 were called upon to deliver the possession of the secured assets. Respondent No. 3 vide letter dated 11th September 2007 has not disputed the claim of the Petitioner, however, requested for time for repayment of dues. As the Respondent Nos. 3 and 6 failed to discharge their liability under the SARFAESI notice, Petitioner by their notice dated 4th January, 2008 addressed to the Respondent No. 3 called upon the Respondent No. 3 to hand over and deliver possession of the secured assets on 16th January 2008.
8. Pursuant to the said notice, symbolic possession of the secured assets was taken by the Petitioner and necessary possession notice was published in the newspapers. The Petitioner at latter point of time filed application under Section 14 of the SARFAESI Act before the District Collector / Magistrate bearing Application No. 39 of 2008. The District Collector / Magistrate by his order dated 17th July 2008 allowed the application and provided necessary assistance to the Petitioner bank in taking possession of the secured assets.
9. The learned Counsel for the Petitioner has submitted that the Respondent Nos. 3 to 6 filed Securitization Application No. 8 of 2009 under Section 17 of the SARFAESI Act interalia challenging the action initiated by the Petitioner under Section 14 of the SARFAESI Act. Apart from the other grounds raised in the said application, the Respondent Nos. 3 to 6 also raised a specific ground that no action under the SARFAESI Act can be initiated against two of the properties, viz. Survey No. 158, Hissa No. 2-B and Survey No. 159, Hissa No. 1 situate at Village Nadhal, Taluka Khalapur, District Raigad as the same were agricultural lands. The Petitioner opposed the said application by filing their reply. After hearing the parties and considering the pleadings, the Presiding Officer MDRT-1 vide order dated 15th December, 2009 was pleased to dismiss the Securitization Application No. 8 of 2009.
10. The learned Counsel for the Petitioner further submitted that the Respondent Nos. 3 to 6 on 15th January 2010 filed Appeal bearing (Lodging) No. 47 of 2010 under Section 18 of the SARFAESI Act challenging the order dated 15th December 2009 passed in Securitization Application No. 8 of 2009.
11. The Petitioner on 29th January 2010 issued the sale notice under Section 13(4) of the SARFAESI Act for sale of the secured assets on 4th March, 2010. The Respondent Nos. 3 to 6 filed Writ Petition (Lodging) No. 485 of 2010 in this Court seeking necessary direction to the DRAT to urgently hear the appeal on merits and for stay of the proposed auction which was fixed by the Petitioner on 4th March 2010. The said writ petition was dismissed as the Respondent Nos. 3 to 6 had already preferred an appeal before the DRAT vide Order dated 5th March 2010.
12. It is the case of the Petitioner that having failed to obtain any order either from DRAT Mumbai in appeal filed under Section 18 of the SARFAESI Act or in Writ Petition (L) No. 485 of 2010, Respondent Nos. 3 to 6 surreptitiously and without any notice to the...
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