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In the High Court of Judicature at Hyderabad
RAMESH RANGANATHAN & M. SATYANARAYANA MURTHY, JJ.
M/s. SVPCL Limited Rep., by its Managing Director, K. Mallikarjuna Reddy – Appellant
Versus
The State Bank of India & Another – Respondents
Writ Petition No. 9275 of 2014
Decided on : 09-04-2015
Industrial Companies Act, 1985 – Loan – Recovery of – Immovable property – Auction – Possession of property – Writ Petition is filed questioning the action of the 1st respondent bank in seeking to take possession of the immovable properties of petitioner company pursuant to the notice issued under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and notice of Advocate Commissioner dated intimating that possession of the immovable properties of the petitioner at Vijayawada would be taken on as provisions of Sick Industrial Companies Act, 1985 – Certain clarifications, and called upon the petitioner to furnish certain documents. In response thereto, the petitioner claims to have furnished all the details sought informed petitioner, by its letter dated that their application, under Section 15 of SICA dated was registered as Case as per the decision of the BIFR, in regard to registration, the company was restrained from disposing of, or alienating in any manner, any of its fixed assets without the consent of the BIFR; as per Form A, there were several state government, central government, and other statutory dues outstanding against the company; however complete, correct and latest particulars of the dealing officers of the respective department were not available on record; the petitioner should submit complete, correct and latest addresses of the offices dealing with their case; a copy of Form A – Held, Petitioner seeks a direction to the first respondent-bank to refrain from continuing proceedings under the SARFAESI Act, as the reference made by them is pending enquiry before the BIFR. It is no doubt true that the validity of the proceedings before the BIFR are not under challenge in this Writ Petitioner remains that an order passed by a Court Tribunal without jurisdiction over the subject matter, or on other grounds which goes to the root of its exercise of jurisdiction, suffers from inherent lack of jurisdiction – An order passed by such a Court/Tribunal is a nullity, and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even in collateral proceedings – True it is that no order can be ignored unless a finding is recorded that it is illegal, void or not in consonance with the law, and this principle is equally true even where the ‘brand of invalidity’ is plainly visible: for there also the order can effectively be resisted in law only by obtaining the decision of the Court/Tribunal – As the invalidity of proceedings before a Court/Tribunal, which suffer from inherent lack of jurisdiction, can be set up even in collateral proceedings it would suffice for this Court to declare the reference made by the petitioner to the BIFR, by their letter dated and registration of the reference as Case No.89 of 2013, as a nullity. As these proceedings are void, it is enough for the Court to declare it so, and it collapses automatically Municipal Corporation – Writ Petition must be, and is accordingly, dismissed.
Ramesh Ranganathan, J.
This Writ Petition is filed questioning the action of the 1st respondent bank in seeking to take possession of the immovable properties of the petitioner company pursuant to the notice issued under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act 54 of 2002), (for short ‘the SARFAESI Act’), and the notice of the Advocate Commissioner dated 21.03.2014 intimating that possession of the immovable properties of the petitioner at Vijayawada would be taken on 28.03.2014, as violative of the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (for short ‘SICA’).
The petitioner was initially constituted as a partnership firm in the year 1992. It was later converted into a public limited company in the year 1999. While the petitioner’s manufacturing activities were initially confined to Vijayawada, a new unit was set up by them at Hyderabad in the year 1999-2000; and, thereafter, a third unit was set up by them in the Visakhapatnam SEZ area. The overseas branch of the 1st respondent Bank had sanctioned a term loan of Rs.12.44 crores to the petitioner in the year 2006. The sanctioned limits of the term loan was later enhanced to Rs.19.06 crores. As security for the said loan, the petitioner company created an equitable mortgage over their immovable properties. The loan amount of the petitioner became a non-performing asset (“NPA” for short). The 1st respondent bank initiated proceedings, and issued notice dated 27.08.2009 under Section 13(2) of the SARFAESI Act, demanding payment of Rs.19,07,21,161/-. A similar notice dated 03.11.2010 was issued through the Stressed Asset Management branch of the respondent bank demanding payment of Rs.22,38,78,147/-. As the said amount was not paid, the respondent bank instituted proceedings before the Debt Recovery Tribunal (for short the “DRT”) under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the “DRT Act”) by filing O.A.No.252 of 2010 for recovery of Rs.21,96,37,830.53 ps. They also initiated action, under Section 13(4) of the SARFAESI Act, by issuing notices dated 18.02.2011 and 19.02.2011.
Aggrieved thereby the petitioner filed an application under Section 17 of the SARFAESI Act, in S.A.No.135 of 2011, before the DRT, Hyderabad. They filed I.A.No.349 of 2011 therein seeking an interim order to restrain the respondent-bank from proceeding further. The said I.A. was dismissed on 10.06.2011. Aggrieved thereby, the petitioner preferred an appeal to the Debts Recovery Appellate Tribunal, Chennai (DRAT), along with MA (SA) No.235 of 2011 seeking stay of operation of the order of the DRT dated 10.06.2011, and a further order restraining the authorised officer of the respondent-bank from proceeding with recovery. The DRAT passed orders, in MA (SA) No.235 of 2011 dated 17.06.2011, staying the operation of the order passed by DRT in I.A.No.349 of 2011. The authorised officer was also restrained from proceeding further under the provisions of the SARFAESI Act.
Aggrieved thereby the first respondent-Bank filed W.P.No.24388 of 2011 before this Court contending that the order passed by the DRAT on 17.06.2011 contravened the first and second provisos to Section 18(1) of the SARFAESI Act. Three weeks, after granting absolute stay without any conditions, the DRAT, on 08.09.2011, suomotu modified its earlier order dated 17.06.2011 and directed the petitioner to deposit Rs.6.00 crores before it on or before 30.09.2011. The DRAT observed that, in the event the petitioner deposited the said amount on or before the stipulated time, the authorised officer stood restrained from proceeding further under the provisions of the SARFAESI Act. Aggrieved by the order of the DRAT dated 08.09.2011, the petitioner filed W.P.No.27357 of 2011 before this Court.
By a common order, in W.P.No.24388 of 2011 and W.P. No.27357 of 2011 dated 20.01.2012, a Di
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