The court upheld the principle of unjust enrichment, ordering the Bank to refund the petitioner Rs.1 crore as he had no liability for the loan repayment, thus prohibiting the Bank from withholding the funds.

ORDER :

1. This writ petition for Mandamus is filed to declare the action of the 2nd respondent in not refunding a sum of Rs.1 crore, deposited by the petitioner, in compliance with the order of Debts Recovery Tribunal in securitization application No.51 of 2016 and in writ petition No.4093 of 2019 on the file of this Court, despite disposal of the O.A.No.299 of 2012 filed by the 2nd respondent-Bank, as illegal, arbitrary and consequently sought direction to respondent-Bank to refund the said sum of Rs.1 crore to the petitioner.

2. Heard Mr. M.R.K.Chakravarthy, learned counsel for the petitioner and Mr. S.Satyanarayana Moorthy, learned Standing Counsel for respondent Nos.2 and 3-State Bank of India. None appeared for respondent No.1.

3. A company by name M/s. East India Surimi Company Private Limited isthe principal borrower, which availed loan from the 2nd respondent-State Bank of India. It has offered its immovable property as security for repayment of the loan amount. As the principal borrower committed default in repayment of the loan amount, the Bank has initiated the measures under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘SARFAESI Act’). In the said process, the Bank has brought the immovable property of the petitioner herein by name M/s. TM FoodProcessing Limited, which was acquired by the petitioner from the 4th respondent, in O.A.No.299 of 2012, for realization of the loan amount. On the ground that the petitioner is not the principal borrower or the guarantor and his property is not a secured asset and it cannot be sold in the auction for realization of the loan amount, the petitioner has approached the Debts Recovery Tribunal by way of filing S.A.No.51 of 2016, for redressal of his grievance. Along with the said application, he has filed an interlocutory application for stay of the measures initiated by the Bank. In the interlocutory application, while granting stay, the Debts Recovery Tribunal has directed the petitioner to deposit a sum of Rs.50 lakhs. Therefore, a conditional stay was granted on depositing a sum of Rs.50 lakhs. In compliance with the said direction, the petitioner has deposited Rs.50 lakhs to the account of the Bank. Accordingly, the stay was granted. Subsequently, the said S.A.No.51 of 2016 was dismissed for default. The property of the petitioner was put to sale. So, the petitioner has approached this Court and filed a writ petition to stall the said proceedings of the sale. This Court has disposed of the said writ petition with a condition of further depositing of Rs.50 lakhs to the account of the Bank for restoration of the securitization application that was dismissed for default. So, in total the petitioner has deposited Rs.1 crore, pursuant to the direction given by the Debts Recovery Tribunal and pursuant to the direction given by this Court, to the account of the Bank. The securitization application that was dismissed for default was restored on to the file of the Debts Recovery Tribunal. After hearing both the parties, the S.A.No.51 of 2016 filed by the petitioner was allowed as per the order dated 26.09.2019. The said order became final as the same was not challenged by the Bank or the principal borrower or the guarantor. The O.A. that was preferred by the Bank before the Debts Recovery Tribunal, Visakhapatnam was also dismissed, as per the order dated 09.02.2024. In all the said proceedings i.e., in S.A.No.51 of 2016 and also in O.A.No.299 of 2012, it is found that the petitioner herein is not liable for repayment of the loan amou