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2014 Supreme(Pat) 385
IN THE HIGH COURT OF JUDICATURE AT PATNA
Navin Sinha and Vikash Jain, JJ.
Mukesh Golcha (in 185)
The Zonal Manager, Union Bank Of India Zonal Office Of Union Bank Of India & Ors. (in 833)
The Regional Manager, Central Bank Of India , Regional Office, Represented Through Its Regional Manager/Assistant General Manager & Ors. (in 942)
Versus
Kishore Kumar Sharma (in all) - Respondents
Letters Patent Appeal Nos.185, 833, 942 of 2013
Decided On: 18-04-2014
Advocate Appeared:
For the Appellant/s : Mr. Mukund Jee
For UBI : Mr. H. K. Sharan
For CBI : Mr. Bimlendu Mishra
For Private Respondent:Mr. Y. V. Giri, Sr. Advocate with Mr. Nikhil Agrawal
For Union of India : Mr. Anshuman Singh (In LPA No.833 of 2013)
For the Appellant/s : Mr. H. K. Sharan
For Private Respondent:Mr. Y. V. Giri, Sr. Advocate with Mr. Nikhil Agrawal
For CBI : Mr. Bimlendu Mishra
For Auction Purchaser : Mr. Mukundjee
For Union of India : Mr. Anshuman Singh (In LPA No.942 of 2013)
For the Appellant/s : Mr. Bimlendu Mishra
For Private Respondent:Mr. Y. V. Giri, Sr. Advocate with Mr. Nikhil Agrawal
For Auction Purchaser : Mr. Mukundjee
For UBI : Mr. H. K. Sharan
For Union of India : Mr. Anshuman Singh
Headnote:
CAV Order - Mortgaged Lands - The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (D R T Act) - Section 19, 20, 25, 26, 27, 28, 29, 30, 34, 70 - The judgment discusses the fraudulent construction of an apartment complex on mortgaged lands, the rights of the Banks, the actions of the guarantor and the builder, and the availability of alternative statutory remedies under the D R T Act.
Fact of the Case:
The builder constructed an apartment complex on mortgaged lands without the Banks' knowledge. The guarantor colluded with the builder to avoid the mortgage and fraud the Banks. The Banks took no steps to inform the builder about non-repayment of the loans. The D R T was directed to implead the builder and respondent purchasers as parties and decide matters afresh.
Finding of the Court:
The court found that the builder and the respondent purchasers were aware of the mortgage. The recovery and attachment proceedings had to be confined to the guarantor's/owner's share only. The court dismissed the writ petition in its challenge to O.A. No. 27 of 2002/ Recovery Proceedings No. 169 of 2002 filed by the U B I.
Issues: The issues included the fraudulent construction on mortgaged lands, the rights of the Banks, the actions of the guarantor and the builder, and the availability of alternative statutory remedies under the D R T Act.
Ratio Decidendi: The court held that the D R T Act provides a complete code with adequate alternative statutory remedies. Recourse cannot be had directly under Article 226 of the Constitution. The court also emphasized the need to exhaust remedies available under the relevant statute before availing remedy under Article 226 of the Constitution.
Final Decision: The court dismissed the writ petition in its challenge to O.A. No. 27 of 2002/ Recovery Proceedings No. 169 of 2002 filed by the U B I. The order under appeal setting aside the order in O.A. No. 6 of 2004 was set aside. Recovery Proceeding No. 154 of 2009 filed by the C B I shall proceed in accordance with law.
The three appeals arise from order dated 29.11.2012 allowing C W J C No.11553 of 2008 filed by respondents 1 to 4 (hereinafter referred to as ‘the respondent purchasers’). L P A No.185 of 2013 has been filed by the respondent ‘auction purchaser’. L P A number 833 of 2013 has been filed by the respondent United Bank of India (hereinafter referred to as ‘U B I’). L P A No.942 of 2013 has been filed by the respondent Central Bank of India (hereinafter referred to as ‘C B I ‘).
2. The Learned Single Judge held that the builder M/s Uttam Ghar Developers Pvt. Ltd (hereinafter referred to as “the builder’) or the respondent purchasers had no knowledge of the mortgage and were not made aware that the construction was being raised on lands mortgaged to the two Banks. The building plan had been duly sanctioned by the Patna Regional Development Authority. The constructions were raised and the respondent purchasers put in possession by the builder in 2001–2002 before the Banks filed O A applications under The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called ‘the D R T Act’) before the Debt Recovery Tribunal (hereinafter called ‘the D R T’) in 2002 and 2004 respectively. The Banks took no steps to inform the builder about non-repayment of the loans and also did not take any steps to stop construction. The builder and the respondent purchasers were the real affected and contesting parties but were not impleaded and heard before the D R T. The value of the mortgaged properties had escalated since the time of mortgage. The debts of the two Banks could well be recovered from the nine flats in the owners/mortgagers share (hereinafter referred to as the ‘guarantor’). The final order dated 5.12.2002 granting certificate of recovery in the O A No. 27 of 2002 filed by U B I including the auction sale dated 2.7.2008 in Recovery Proceedings 169 of 2002 as also the final order dated 6.8.2009 in O A No.6 of 2004 filed by C B I issuing certificate for recovery were set aside. The D R T was directed to implead the builder and respondent purchasers as parties in both applications, issue notice to them and decide matters afresh confining the issue for recovery by the two Banks only to the nine flats and six parking spaces in the guarantor/ owners share.
3. Respondent Smt. Sheoraj Devi, the guarantor mortgaged her entire lands measuring 6 kathas 16 dhurs and 12 dhurkies situated at khata no.123, Tauzi no.5536, Thana no.19 in the prime area of Danapur in Patna town, to the C B I on 22.1.1998 and the U B I on 12.7.1999 respectively by deposit of two separate Title deeds for loan of 45 lacs and 150 lacs respectively taken by the proprietor of M/S Amrita Sales Enterprises from each of the Banks respectively. No repayment of the loan was made whatsoever. The guarantor soon thereafter on 20.4.2000 entered into a collusive agreement with the builder for construction of an apartment complex upon the mortgaged lands consisting of the owners share for nine flats with six parking space and builders share. This was done without the knowledge and permission of the two Banks obviously with the intention to avoid the mortgage and fraud the Banks. The development agreement stated that the property was not encumbered, charged or mortgaged, etc. The title deeds would remain with the builder. Notwithstanding a public notice by the U B I, a separate notice by the U B I to the builder, notice issued by the D R T as also the injunction ordered by it, constructions continued and flats sold to purchasers.
4. O A No. 27 of 2002 was filed by U B I before the D R T. The guarantor also entered appearance. Injunction regarding construction was ordered on 16.8.2002. Certificate for recovery was issued on 5.12.2002 for Rs.1,27,74,527.25p leading to orders for auction sale in Recovery Proceedings No. 169 of 2002 and the purchase of eight flats out of nine in the guarantor/owners share, by the auction purchaser. No Appeal was filed under Sect
