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IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
V. RAMASUBRAMANIAN, J. UMA DEVI, JJ.
M/s. Concern Ready mix, rep. by its Proprietor, Y. Sunitha Reddy - Petitioner
Versus
The Authorised Officer, Corporation Bank, Zonal Office & Another - Respondents
Writ Petition No. 20729 of 2018
Decided On : 31-12-2018
SARFAESI Act, 2002 – Section 17,13(2), 13(8) – Rule 8(6),9(1) – Security Interest and Recovery of Debts laws and Miscellaneous Provisions (Amendment) Act, 2016 – Section 13 (8) – Auction of sale Challenged by petitioners before Tribunal, on three substantial grounds, (i) after amendment to Section 13(8) of Act 2002, Authorized Officer required to give 30 days time from date of issue of notice under Rule 8(6) before issue sale notice under Rule 9(1), but 1 respondent issued a single notice under both rules thereby violating mandate of law – (ii) Property brought to sale admittedly an agricultural land and Section 31(i) of Act attracted (iii) Valuation report taken by bank way-back violating law – Held, Petitioners made false representation in order to induce Bank to sanction limits to them, they cannot go back on those representations, with a view to deprive Bank of their dues. No amount of Case Law would go to rescue of such a person – Bank could not get a buyer property in 6 auction sales. It was only 7th auction Bank succeeded – Petitioner cannot make an issue out of valuation report – Debts Recovery Tribunal applied its mind all three contentions and chose to reject them with its own reasons not find any error of law or perversity of finding on part of Debts Recovery Tribunal, so as to set aside order of Debts Recovery Tribunal – Petition dismissed – [Para 32,33,36,37]
Facts of the case:
Challenged by petitioners before Tribunal, on three substantial grounds, (i) after amendment to Section 13(8) of Act 2002, Authorized Officer required to give 30 days time from date of issue of notice under Rule 8(6) before issue sale notice under Rule 9(1), but 1 respondent issued a single notice under both rules thereby violating mandate of law – (ii) Property brought to sale admittedly an agricultural land and Section 31(i) of Act attracted (iii) Valuation report taken by bank way-back violating law
Findings of the court:
Petitioners made false representation in order to induce Bank to sanction limits to them, they cannot go back on those representations, with a view to deprive Bank of their dues. No amount of Case Law would go to rescue of such a person – Bank could not get a buyer property in 6 auction sales. It was only 7th auction Bank succeeded – Petitioner cannot make an issue out of valuation report – Debts Recovery Tribunal applied its mind all three contentions and chose to reject them with its own reasons not find any error of law or perversity of finding on part of Debts Recovery Tribunal, so as to set aside order of Debts Recovery Tribunal
Result: Petition Dismissed
V. Ramasubramanian, J.
1. Challenging the dismissal of an appeal filed by them under Section 17 of the SARFAESI Act, 2002, the borrower and the guarantor have come up with the above writ petition.
2. We have heard Mr. C.B. Ram Mohan Reddy, learned counsel for the petitioners, Mr. Vedula Venkata Ramana, learned Senior Counsel appearing for the 1st respondent-bank and Mr. Aadesh Varma, learned counsel appearing for the 2nd respondent.
3. The case on hand has a checkered history, as can be seen from the following:
(a) The 1st petitioner was sanctioned a term loan, way-back in May 2011, for the establishment of a Ready-mix Concrete Unit. He was also sanctioned a cash credit limit.
(b) The 1st petitioner committed default in repayment and the account was classified as NPA on 31.10.2016.
(c) Therefore, a demand notice dated 07.11.2016 was issued under Section 13(2). A possession notice was issued on 24.03.2017.
(d) Thereafter, a sale notice under Rule 8(6) was issued on 10.07.2017. It was actually a notice under Rule 8(6) as well as notice under Rule 9(1). However, the date of auction was fixed as 18.08.2017, which was beyond 30 days of the date of the notice.
(e) Since the auction failed, a fresh notice dated 23.08.2017 was issued fixing the date of auction as 15.09.2017. Since the same also failed, a fresh notice dated 21.09.2017 was issued fixing the date of auction as 12.10.2017.
(f) The third auction also failed forcing the Bank to issue a 4th notices dated 23.10.2017 fixing the date of auction as 16.11.2017. The same also failed and hence a 5th notice was issued on 20.11.2017 fixing the auction on 21.12.2017.
(g) The same also failed forcing the Bank to issue a 6th notice on 12.12.2017. The same also failed forcing the Bank to issue a 7th notice on 29.12.2017 fixing the auction on 19.01.2018.
(h) Fortunately for the Bank, the auction was successful on 19.01.2018 and the 2nd respondent became the highest bidder for a sum of Rs.3,10,38,000/-.
(i) Immediately, the petitioners approached the Debts Recovery Tribunal by way of an appeal under Section 17 of the SARFAESI Act, 2002 in S.A.No.30 of 2018. But before any interim order could be passed by the Debts Recovery Tribunal, a sale certificate was issued by the Bank in favour of the 2nd respondent on 05.02.2018. Therefore, the Debts Recovery Tribunal passed a limited interim order on 05.02.2018 directing the 2nd respondent not to create any third party interest.
(g) Eventually, the appeal filed by the petitioners in S.A.No.30 of 2018 was renumbered as S.A.No.159 of 2018 and after hearing both parties, the Debts Recovery Tribunal dismissed the appeal by a considered order dated 08.06.2018. As against the said order, the petitioners have an effective alternative remedy of appeal to the Debts Recovery Appellate Tribunal, but the petitioners have chosen to come up with the above writ petition, by-passing the alternative remedy.
4. The auction sale was challenged by the petitioners before the Tribunal, on three substantial grounds, viz., – (1) that after the amendment to Section 13(8) of the SARFAESI Act, 2002, by the Amendment Act No.44/2016 w.e.f. 01.09.2016, the Authorized Officer was required to give 30 days time from the date of issue of notice under Rule 8(6) before the issue of the sale notice under Rule 9(1), but the 1st respondent issued a single notice under both the rules thereby violating the mandate of law; (2) that the property brought to sale was admittedly an agricultural land and hence Section 31(i) of the Act was attracted; and (3) that though the valuation report taken by the bank way-back in May 2011 showed the market value at Rs.4,62,50,000/- and the valuation report dated 20.05.2017 showed the market value at Rs.6,80,43,555/-, the Bank fixed the reserve price at Rs.3,09,38,000/- thereby violating the law laid down by the Supreme Court in J. Rajiv Subrahmaniyam v. P
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