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ANDHRA PRADESH HIGH COURT AT AMARAVATI
C. Praveen Kumar, Lalitha Kanneganti, JJ.
M/s. Rvs Networks India Pvt Ltd. - Appellant
Versus
Bank Of Baroda - Respondent
Writ Petition No. 13154 of 2020
Decided On : 13-08-2020
SARFAESI ACT - SECTION 13(2), 13(4), 17, 18, 28 - RULE 8(6) - EDUCATION ACT - SECTION 28 - WRIT PETITION - MAINTAINABILITY - ALTERNATIVE REMEDY - JURISDICTION - SALE NOTICE - DEFECTIVE NOTICE - SALE OF PROPERTY - BAR UNDER SECTION 28 OF EDUCATION ACT - APPLICABILITY - INTERPRETATION - COURT ANALYSIS AND CONCLUSION - Petitioners challenged the Sale Notice issued by the Respondent-Bank under Rule 8(6) of Security, Interest (Enforcement) Rules, 2002, as illegal and violative of SARFAESI Act and the Rules made thereunder. The Court held that the Writ Petition is not maintainable as an efficacious alternative remedy is available to the petitioners under Section 17 of the SARFAESI Act. The Court further held that the bar under Section 28 of the Education Act for sale of the property is not applicable in the instant case as the property in dispute is in the name of an individual and not in the name of any private institution.
Fact of the Case:
The petitioners, a company and its directors, challenged the Sale Notice issued by the respondent-bank under Rule 8(6) of Security, Interest (Enforcement) Rules, 2002, as illegal and violative of SARFAESI Act and the Rules made thereunder. The petitioners had availed loan facilities from the respondent-bank and had mortgaged their property as security. The petitioners defaulted in repayment of the loan, and the bank issued a notice under Section 13(2) of SARFAESI Act demanding payment of the outstanding dues. The petitioners failed to pay the dues, and the bank issued a possession notice under Section 13(4) of the Act. The petitioners filed a writ petition challenging the Sale Notice issued by the bank.
Finding of the Court:
The Court held that the Writ Petition is not maintainable as an efficacious alternative remedy is available to the petitioners under Section 17 of the SARFAESI Act. The Court further held that the bar under Section 28 of the Education Act for sale of the property is not applicable in the instant case as the property in dispute is in the name of an individual and not in the name of any private institution.
Issues: 1. Whether the Writ Petition is maintainable in light of the alternative remedy available under Section 17 of the SARFAESI Act? 2. Whether the bar under Section 28 of the Education Act for sale of the property is applicable in the instant case?
Ratio Decidendi: 1. The Court held that the Writ Petition is not maintainable as an efficacious alternative remedy is available to the petitioners under Section 17 of the SARFAESI Act. The Court relied on several Supreme Court judgments which have held that a writ petition under Article 226 of the Constitution of India is normally not entertained where there is an efficacious alternative remedy. 2. The Court held that the bar under Section 28 of the Education Act for sale of the property is not applicable in the instant case as the property in dispute is in the name of an individual and not in the name of any private institution. The Court interpreted Section 28 of the Education Act to mean that it applies only to private institutions and not to individuals.
Final Decision: The Court disposed of the Writ Petition and directed the petitioners to approach the Debt Recovery Tribunal-II, Hyderabad, where cases filed by both parties are pending adjudication.
JUDGMENT
C.Praveen Kumar, J. - The present Writ Petition came to be filed seeking issuance of writ of Mandamus declaring the Sale Notice issued by the Respondent-Bank under Rule 8(6) of Security, Interest (Enforcement) Rules, 2002, as illegal, arbitrary and violative of provisions of SARFAESI Act and the Rules made thereunder.
2. The circumstances which lead to filing of the present Writ Petition are as under :
The 2nd petitioner is the Managing Director of the 1st petitioner - company, who has filed this Writ Petition challenging the Notice issued under Rule 8(6) of Security, Interest (Enforcement) Rules, 2002. The 1st petitioner - company is carrying on business of transmission and distribution of various channels through satellite and cable in India and outside India. The 3rd and 4th petitioners are Directors of the 1st petitioner - company. It is said that the 1st petitioner availed cash credit facility and term loans to a tune of Rs.4.00 crores towards cash credit, and an amount of Rs.7.00 crores towards term loan-1 and further amount of Rs.1.00 crore towards terms loan-2. At the time of availing the loan, petitioners 2 to 4 stood as guarantors and by equitable mortgage of the immovable property. It is said that up to end of 2014 there was no default in payment of any amount, but, subsequently, the petitioner-company was irregular in payment due to bifurcation of the State of Andhra Pradesh. While things stood thus, a notice under Section 13(2) of SARFAESI Act, 2002 was received by the petitioner on 9.2.2017 from the respondent-bank, wherein it was informed that the loan account of the 1st petitioner has been classified as Non-Performing Asset and that the 1st petitioner was called upon to pay in full and discharge its liability to the bank, aggregating Rs.10,09,13,039.46 ps. plus interest. Further, notices also came to be issued to petitioners 2 to 4 under Section 13(2) of the SARFAESI Act informing them that, if the amount is not paid, bank shall be at liberty to exercise all or any of the rights under Section 13(4) of the Act. On 18.12.2017, a legal notice was also issued to the petitioners calling upon them to clear the amount.
3. On 6.2.2018, the bank is said to have addressed a letter about One Time Settlement for clearing the outstanding dues. The 1st petitioner is said to have addressed a letter on 8.3.2018 accepting the offer made by the respondent-bank and that both parties have agreed for One Time Settlement at Rs.6,30,00,000/-. It is said that petitioners have paid Rs.63,00,000/- as upfront of the acceptance of OTS. As the petitioners failed to honour the commitments in terms of the condition, respondent-bank filed O.A.No.140 of 2018 for recovery of debt of Rs.11,18,60,038/-. Before filing the O.A., the respondent-bank has filed Criminal M.P.No.166 of 2017 before the Hon'ble Chief Judicial Magistrate-cumPrincipal Senior Civil Judge, Chittoor, for issuance of warrant of commission, which was ordered on 12.4.2018. The order passed in criminal case under Section 14 of the SARFAESI Act was challenged before the Tribunal vide SA No.176 of 2018 and the same is pending consideration.
4. Pending proceedings before the Tribunal, the present notice under Rule 8(6) came to be issued by the bank informing the petitioners that if the outstanding amount mentioned therein is not paid within 30 days of the notice, the properties will be sold in the manner prescribed therein. Challenging the same, the present Writ Petition came to be filed on the ground that in view of Section 28 of the Education Act, there is bar for sale of the property, more so, when the buildings raised therein are being used for educational purpose. The case of the petitioner is that nearly 6000 students are attending various courses in the academy established in the said place and that they will be put to irreparable loss and difficulty, if the property is sold. Apart from that, the learned counsel for the petitioners would contend that as the Sale Notice
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